The Securities and Exchange Board of India (SEBI) has recently introduced several significant regulations aimed at enhancing transparency and investor protection across India’s financial markets. Here’s a brief
The Securities and Exchange Board of India (SEBI) has recently introduced several significant regulations aimed at enhancing transparency and investor protection across India’s financial markets. Here’s a brief overview of these updates:
SEBI is addressing inconsistencies in the fee structures of Market Infrastructure Institutions (MIIs), which include stock exchanges, clearing corporations, and depositories. The previous volume-based slab charges created disparities between the fees charged to clients and the amounts paid by members to MIIs. Starting October 1, 2024, MIIs are required to standardize their fee structures to ensure transparency and uniformity. They must align their charges with the actual amounts received, update their systems, revise regulations, and regularly report their progress to SEBI.
SEBI has revised the denomination requirements for debt securities and non-convertible redeemable preference shares. The minimum face value for private placements has been reduced from Rs. 1 lakh to Rs. 10,000. This change is intended to attract more non-institutional investors and boost market liquidity. The circular also introduces new conditions for credit enhancements and mandates the involvement of Merchant Bankers for such issuances. Outdated clauses have been removed, and trading lot requirements have been updated. These provisions apply to all new private placements from the effective date of the circular.
New regulations have been introduced to bolster fraud prevention mechanisms for stockbrokers. Under the Stockbrokers (Amendment) Regulations, 2024, brokers are required to implement advanced surveillance systems, internal controls, and whistleblower policies. The Broker’s Industry Standards Forum, in consultation with SEBI, will establish these standards. Compliance deadlines are set based on the number of Unique Client Codes (UCCs): brokers with over 50,000 UCCs must comply by January 1, 2025; those with 2,001 to 50,000 UCCs by April 1, 2025; and brokers with up to 2,000 UCCs by April 1, 2026. Qualified Stockbrokers (QSBs) must meet the requirements by August 1, 2024. Stock exchanges will monitor implementation and report to SEBI.
Credit Rating Agencies (CRAs) are now authorized to conduct rating activities within the International Financial Services Centre (IFSC) – Gujarat International Finance Tech-city (IFSC-GIFT City), under the oversight of the International Financial Services Centres Authority (IFSCA). Similarly, ESG Rating Providers (ERPs) are permitted to perform ESG rating activities in the IFSC-GIFT City. The IFSCA will oversee regulatory issues and enforcement for these ratings. These updates are effective immediately to ensure efficient oversight and operations within this financial hub.
