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SEBI will take up recommendations of two key committees together at its next board meeting to be held on September 18. The market regulator will take up recent recommendations given by two panels headed by TK Vishwanath, former Law Secretary (on fair market conduct), and AR Dave, former judge of the Supreme Court (on settlement mechanism). Public comments on both the reports have been sought till Saturday.
According to experts tracking SEBI, it is rare to see the regulator rushing to take up two key committee reports in a single board meet and also implement it immediately.
In 2018, SEBI came up with nearly 17 consultation and discussion papers combined together for framing or changing existing policies, compared to just eight in 2017. This year so far, SEBI received four key committee reports, of which recommendations of two have already been implemented. The report on Corporate Governance came in October 2017 but was implemented in 2018.
The urgency shown by SEBI can be partly attributed to upcoming elections and its motive to safeguard against any controversy that could arise if key measures were implemented closer to elections, according to a source close to SEBI.
Ahead of elections
“To steer clear of controversy ahead of the 2019 general elections in India, SEBI may decide not to keep any of the key policy decisions it wants to take, pending beyond September or October,” the source said.
SEBI has even advanced the date of its board meeting to September 18 from 27 and is likely to implement decisions taken in the meet from October, the source added. However, other officials close to SEBI said there was no link.
In its reply to BusinessLine , the SEBI spokesperson said, “The dates of board meetings are finalised considering availability of board members. As per SEBI (Procedure for Board Meetings) Regulations, 2001, meetings of the board shall be convened at least once in each quarter of the year. The last board meeting was held on June 21. Hence, the next one has to be held on or before the end of next quarter, ie, September 30, 2018.”
Net worth-based trading
Implementation of the Fair Market report may kick-up a storm as the committee has recommended entry barriers for retail investors. It is proposed that retail players be allowed to trade in markets based on their net worth.
SEBI’s view point of looking at serious capital market violations such as front-running and insider-trading may undergo a sea change for the purpose of settlement once the regulator implements the Dave panel recommendations. It could have implications on SEBI’s punishment or sentencing in the algo trading scam, involving the NSE and its officials. The Dave committee has recommended that SEBI follow a single criterion for settlement of cases instead of leaving out a few violations such as insider-trading and fraudulent trade practices. The idea is to follow the principle of market-wide losses to a large number of investors which affect the integrity of the market, for settling cases. This may have implications on pending cases involving corporate houses.
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