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SEBI board to consider new delisting norms, trading reforms

Posted Date : 17-Nov-2023 , 07:58:44 am | Posted By CASANSAAR print Print
Securities and Exchange Board of India (SEBI) Chairperson Madhabi Puri Buch Thursday said the regulator would review new proposed delisting regulations and trading plan reforms at its board meeting soon.

SEBI had earlier said it may allow companies to delist shares at a fixed price as against the current reverse book-building process. Certain constituents in the market, in anticipation of the delisting, acquire shares and jack up the price of shares at unsustainable levels. Because of the way in which it (reverse book-building process) is formulated and because of the 90 per cent threshold, there is a possibility of misuse by certain operators who are specialists in the delisting of shares.

SEBI is also considering the possibility of extending trading hours for the cash market, following the submission of a proposal by the NSE for extended trading hours in the futures and options (F&O) segment.

The NSE’s phased plan suggests a gradual approach to extending trading hours. In the initial phase, it proposes extending trading hours for Index F&O from 6 pm to 9 pm. The second phase suggests Index F&O trading be extended till 11.30 pm. Finally, in the third phase, the plan is to extend cash market trading hours until 5 pm.

Addressing the 20th Annual Capital Markets Conference (CAPAM2023) organised by industry body FICCI, Buch underscored India’s advancements in the financial sector and its role as a pioneer in setting global standards, highlighting that the country is increasingly being looked upon for best practices in capital market regulation and innovation. “We rarely need to refer to global best practices because we have become the benchmark for global best practices, and more often than not, the world is reaching out to say we want to know how you did it,” she said.

Buch cited examples like the industry standards for implementing SEBI regulations, which reflects a collaborative approach between regulators and market participants.

She also spoke of the Industry Standards Forum becoming a formal part of the regulatory architecture. Continuing the theme of data-driven decision-making, Buch highlighted SEBI’s initiatives in adopting a consultative approach towards regulation-making or amendments, now becoming a norm for SEBI’s policy-making process.

Between 2003 and 2013, the percentage of consultation papers to the total circulars issued by SEBI was 7 percent, meaning that for every 100 circulars issued only seven were consultation papers. Over the next nine years, it went up to 17 per cent. “It is not that we are imposing more regulations on the market, you are getting that feeling because Sebi is consulting more,” Buch said.

This approach has led to significant reforms in various areas, including insider trading policies, delisting regulations and ESG metrics. The focus remains on ensuring that any new regulations are practical, implementable and backed by comprehensive data.

Buch emphasised SEBI’s fundamental role of capital formation in the economy and the need for efficient regulatory processes. Key reforms in processing applications swiftly and transparently were a highlight, demonstrating India’s commitment to minimising delays and eschewing ‘dogmas’, she said.

Buch presented data, including charts showing the effective management of application pendency and ageing within SEBI, even with increased market activity.

She also mentioned the strides in balancing ease of doing business with trust and stakeholder protection. “If there is no trust in the system, there will be no business,” SEBI chief said, adding, “What is required is addressing the details so that there is ease of compliance.”

FICCI President Subhrakant Panda said, “Vibrant capital markets are necessary to provide capital which is the fuel for economic growth. India’s journey to being a $5 trillion economy along with climate change mitigation will require significant investments. Digital infrastructure, increased awareness, and simplified KYC norms have democratised access to capital markets, taking it beyond Tier 1 cities and financialising household savings”.

“The relationship between a regulator and market participants is not adversarial. FICCI has multiple interactions with SEBI and will continue to engage in a constructive manner to enhance ease of doing business without compromising on the bedrock principles of stakeholder protection and transparency leading to good governance,” he said.

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