The market regulator has given this opinion in response to queries by the country’s second largest private sector lender HDFC Bank with respect to trading that can be done by its employees.
HDFC Bank had sought an informal guidance on whether its employees -- who are in possession of Unpublished Price Sensitive Information (UPSI) related to it or other listed companies dealing with the bank -- can carry out trades on the stocks concerned under discretionary portfolio management scheme. Under the scheme, day to day investment decisions are taken by portfolio manager without involvement of investor. Giving its views, Sebi said dealing in securities, whether it is direct or indirect, is not relevant, “but that any insider when in possession of UPSI should not deal in securities of the company to which the UPSI pertains”.
“Even while dealing in such securities through a discretionary portfolio management scheme, the trades of insider shall be assumed to be motivated by the knowledge and awareness of UPSI,” Sebi said in a recent communication to HDFC Bank. This opinion is with regard to whether the bank’s employee or his relative -- who have no control over investment decision under discretionary portfolio management scheme but are in possession of UPSI -- can do trades on the stocks concerned.
According to the regulator, the lender had also sought an interpretative letter on the issue as well as on another matter in terms of compliance with Sebi (Prohibition of Insider Trading) Regulations.
The second issue on which the bank sought view was whether trade can be done under the scheme when the trading window of the bank or the companies concerned are closed. PIT Regulations mandate operation of a notional trading window as an instrument of monitoring trading by the designated person, the regulator said. “The trading window shall be closed when the compliance officer determines that a designated person or class of designated persons can reasonably be expected to have possession of UPSI.
“... dealings by the bank or the company with which the bank deals in securities through a discretionary portfolio management scheme, when the trading window is closed, shall be assumed to be motivated by the knowledge and awareness of UPSI,” Sebi said. The watchdog also emphasised that its position is based on information furnished. “Different facts or conditions might lead to a different result,” it added.
BSE in parleys to pick up stake in Amfi’s Mutual Fund Utilities
New Delhi: Asia’s oldest bourse BSE is in discussion to pick up stake and form a partnership with industry body Amfi’s mutual fund distribution platform MF Utilities. The proposal from BSE, which runs the leading mutual fund distributor platform StAR MF, is being looked into by a four- member panel set up by Association of Mutual Fund Industry (Amfi), sources said. These members -- Reliance MF CEO Sundeep Sikka; Birla Sunlife MF Chief Executive A Balasubramanian; Religare Invesco MF CEO Saurabh Nanavati; and Edelweiss MF Chief Executive Vikaas M Sachdeva -- will work out on the modalities and evaluate the proposal. The deal is expected to reduce the cost for the mutual fund industry. “Depending on the regulatory approval, BSE can consider taking appropriate stake in MF utility,” a source said. However, a BSE spokesperson declined to comment on the development, while query sent to Amfi remain unanswered. BSE StAR MF, which became operational for all investors in December 2009, is the largest MF distributor platform with close to 5 lakh orders being routed to mutual funds per month.
Irdai mulls uniform disclosure norms for listed and unlisted cos
The Insurance Regulatory and Development Authority of India (Irdai) is mulling to bring in uniform discloser norms for both listed and unlisted companies. "Listing brings more transparency to the working of companies. We thought we will encourage companies to bring in more transparency into their system," Insurance Regulatory and Development Authority of India (Irdai) Chairman T S Vijayan said here.
"We are also thinking...even if the company is not listed, we are thinking whether whatever discloser required by a listed company that can also be brought into an unlisted company," he told reporters on the sidelines of CII Insurance Summit.
Talking about mergers and consolidation in the industry, he said, customer protection is the key and the regulator will ensure that fair treatment is given to them. "If two companies are merging together, it is nothing new in the Indian insurance industry...when LIC was formed many number of companies merged into it," he said. "It is a natural process but we are very clear that customer protection is the key, whatever promises the companies have made to the customer is going to be the key,” he added.