The issue is likely to be discussed on Thursday at a meeting of Sebi’s board, which would also be apprised of the impact of the Finance Ministry’s decision for not agreeing to such a proposal from the capital markets regulator, sources said.
If the current stalemate continues, three national stock exchanges — MCX-SX, United Stock Exchange and BSE — would have to increase their public shareholding by 25.66 per cent, 1.72 per cent and 0.845 per cent respectively by April 2015. At NSE, the public shareholding is at 57.48 per cent, which is well above the required level of 51 per cent.
Sebi is of the view that any restrictions on shareholding of banks and financial institutions by allowing them to hold shares in stock exchanges only as ‘public shareholders’ would hamper their participation in the development of the market. However, Finance Ministry has rejected any relaxation in the public shareholding norms for stock exchanges, saying it would violate the statutory provisions of relevant Acts, sources said.
The Securities Contracts Regulation Act (SCRA) provides for at least 51 per cent stake in a stock exchange to be held by the public shareholders, which can not include those having trading rights on the bourse. Earlier, banks were allowed to be classified as ‘public shareholders’, provided they do not become trading members in the stock exchanges. However, after introduction of currency derivatives segment, it came to light that trading members would necessarily have to be banks and therefore the rules do not allow them to be included in public category.
Subsequently, the matter was discussed by Sebi board and was taken up with RBI and the Finance Ministry. As an interim measure, Sebi had decided in April 2012 that the existing position would continue for a period of three years or till the time necessary amendments are made in the regulations.
However, the Finance Ministry has now opined that inclusion of shareholders with trading rights in the ‘public’ category would violate statutory provisions of relevant norms. Besides, a Bimal Jalan Committee on ‘Review of Ownership and Governance of Market Infrastructure Institutions’ also recommended that no trading or clearing member be allowed on the board of any exchange.
Subsequently, Sebi has told the Ministry that the regulations are primarily aimed at segregating ownership and management of the exchange from trading members to avoid any conflict and the intention was not to ‘keep the institutional investors especially banks and financial institutions away from the management of the exchange’.
‘The intention was to keep the trading members, who were individuals, family houses, corporates etc away from the management of the exchange to bring more transparency,’ Sebi has told the Finance Ministry. Advocating differential treatment to institutional investors, Sebi said that their ownership was scattered and they were run by independent professional management.
Besides, such investors follow ‘good governance practices’, are accountable to various stakeholders including sectoral regulators like RBI and IRDA, and are considered to be ‘informed investors’ that can provide quality input in the functioning of an exchange.
Sebi to seek more funds for investor protection
Mumbai: To bolster awareness among investors and ring-fence them from possible frauds, capital markets regulator Sebi plans to seek additional funds from the Government for strengthening its Investor Protection and Education Fund (IPEF) programmes. Sebi has identified empowerment of investors, strengthening of enforcement and supervision framework and capacity building as among its core focus areas for 2014-15.
The proposal to boost IPEF allocation, along with other efforts to help it execute its regulatory and investor protection functions, would be discussed at the Sebi board meeting here on Thursday, which is likely to be its last meet in the current financial year ending on March 31. With expenses towards various investor protection and education initiatives estimated to be nearly Rs 55 crore for next fiscal, Sebi may seek board's approval for additional funding for IPEF, an official said.
Sebi’s Investor Protection and Education Fund (IPEF) had a corpus of Rs 35 crore at the end of January 2014. Besides to ensure adequate funds are at its disposal, Sebi plans to request the government to allocate funds from Investor Education and Protection Fund (IEPF). The proposal, that focuses mainly on investor awareness and protection, for next financial year would be placed before the board, which is also likely to discuss proposals aimed
at bolstering financial resources of Sebi.
The regulator has broadly identified four core areas of new activities for 2014-15 period. These steps are aimed at further increasing the depth of the domestic capital market and also to ring-fence investors from fraudulent activities.
Portfolio manager assets increase to Rs 7.5 trillion in February
New Delhi: Assets under management of portfolio managers have risen to Rs 7.52 trillion in February, as per Sebi data. The figure has gone up from 7,32,970 crore in January to Rs 7,52,775 crore at the end of February. They had touched a record level of Rs 9,58,121 crore in August, 2013.
The total AUM has nearly doubled since the data was first released by Sebi in December, 2010. Of the total AUM, Rs 5.35 lakh crore is contributed by funds from the Employees' Provident Fund Organisation (EPFO) and Provident Funds. The number of clients for portfolio managers has increased to 58,022 in February from 57,952 in January.
If the current stalemate continues, three national stock exchanges — MCX-SX, United Stock Exchange and BSE — would have to increase their public shareholding by 25.66 per cent, 1.72 per cent and 0.845 per cent respectively by April 2015. At NSE, the public shareholding is at 57.48 per cent, which is well above the required level of 51 per cent.
Sebi is of the view that any restrictions on shareholding of banks and financial institutions by allowing them to hold shares in stock exchanges only as ‘public shareholders’ would hamper their participation in the development of the market. However, Finance Ministry has rejected any relaxation in the public shareholding norms for stock exchanges, saying it would violate the statutory provisions of relevant Acts, sources said.
The Securities Contracts Regulation Act (SCRA) provides for at least 51 per cent stake in a stock exchange to be held by the public shareholders, which can not include those having trading rights on the bourse. Earlier, banks were allowed to be classified as ‘public shareholders’, provided they do not become trading members in the stock exchanges. However, after introduction of currency derivatives segment, it came to light that trading members would necessarily have to be banks and therefore the rules do not allow them to be included in public category.
Subsequently, the matter was discussed by Sebi board and was taken up with RBI and the Finance Ministry. As an interim measure, Sebi had decided in April 2012 that the existing position would continue for a period of three years or till the time necessary amendments are made in the regulations.
However, the Finance Ministry has now opined that inclusion of shareholders with trading rights in the ‘public’ category would violate statutory provisions of relevant norms. Besides, a Bimal Jalan Committee on ‘Review of Ownership and Governance of Market Infrastructure Institutions’ also recommended that no trading or clearing member be allowed on the board of any exchange.
Subsequently, Sebi has told the Ministry that the regulations are primarily aimed at segregating ownership and management of the exchange from trading members to avoid any conflict and the intention was not to ‘keep the institutional investors especially banks and financial institutions away from the management of the exchange’.
‘The intention was to keep the trading members, who were individuals, family houses, corporates etc away from the management of the exchange to bring more transparency,’ Sebi has told the Finance Ministry. Advocating differential treatment to institutional investors, Sebi said that their ownership was scattered and they were run by independent professional management.
Besides, such investors follow ‘good governance practices’, are accountable to various stakeholders including sectoral regulators like RBI and IRDA, and are considered to be ‘informed investors’ that can provide quality input in the functioning of an exchange.
Sebi to seek more funds for investor protection
Mumbai: To bolster awareness among investors and ring-fence them from possible frauds, capital markets regulator Sebi plans to seek additional funds from the Government for strengthening its Investor Protection and Education Fund (IPEF) programmes. Sebi has identified empowerment of investors, strengthening of enforcement and supervision framework and capacity building as among its core focus areas for 2014-15.
The proposal to boost IPEF allocation, along with other efforts to help it execute its regulatory and investor protection functions, would be discussed at the Sebi board meeting here on Thursday, which is likely to be its last meet in the current financial year ending on March 31. With expenses towards various investor protection and education initiatives estimated to be nearly Rs 55 crore for next fiscal, Sebi may seek board's approval for additional funding for IPEF, an official said.
Sebi’s Investor Protection and Education Fund (IPEF) had a corpus of Rs 35 crore at the end of January 2014. Besides to ensure adequate funds are at its disposal, Sebi plans to request the government to allocate funds from Investor Education and Protection Fund (IEPF). The proposal, that focuses mainly on investor awareness and protection, for next financial year would be placed before the board, which is also likely to discuss proposals aimed
at bolstering financial resources of Sebi.
The regulator has broadly identified four core areas of new activities for 2014-15 period. These steps are aimed at further increasing the depth of the domestic capital market and also to ring-fence investors from fraudulent activities.
Portfolio manager assets increase to Rs 7.5 trillion in February
New Delhi: Assets under management of portfolio managers have risen to Rs 7.52 trillion in February, as per Sebi data. The figure has gone up from 7,32,970 crore in January to Rs 7,52,775 crore at the end of February. They had touched a record level of Rs 9,58,121 crore in August, 2013.
The total AUM has nearly doubled since the data was first released by Sebi in December, 2010. Of the total AUM, Rs 5.35 lakh crore is contributed by funds from the Employees' Provident Fund Organisation (EPFO) and Provident Funds. The number of clients for portfolio managers has increased to 58,022 in February from 57,952 in January.