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SEBI to review norms governing Market Infrastructure Institutions including stock exchanges

February 11, 2017
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SEBI BOARD MEETING - SEBI BUDGET FY 2017-18; OFFSHORE DERIVATIVE INSTRUMENTS (ODIs) ; REVIEW OF REGULATIONS AND RELEVANT CIRCULARS PERTAINING TO MARKET INFRASTRUCTURE INSTITUTIONS (MIIs) ETC. ETC.

PRESS RELEASE NO.11/2017, DATED 11-2-2017

The SEBI Board met in New Delhi today and took the following decisions:

SEBI Budget FY 2017-18

1. The SEBI Budget for the financial year 2017-18 was considered and approved by the Board.

The Board also discussed the plan of action for FY 2017-18. Some of the major initiatives proposed are as follows:

  Reducing the listing time gap by bringing down the issue timing from the existing requirement of T+6.
  Allowing, in consultation with Stakeholders and Regulators, institutional participation in commodity derivatives markets in phased manner.
  Facilitating integration between Commodity Spot markets and Derivatives markets, SEBI to initiate consultation with various stakeholders.
  Designing a system of Risk Based Supervision for commodity brokers.
  Setting up a Cyber Security Lab for the securities market.
  Allowing listing and trading of securitisation receipts issued by Assets Reconstruction Companies (ARC) etc.
  Facilitating the objective of "Ease of doing Business", introduction of common application form for registration, opening of bank and demat accounts, and issue of PAN for Foreign Portfolio Investors (FPIs).
  Setting up a facility for online registration of intermediaries.
  Strengthening the research initiatives in SEBI with special focus on research on commodity market, inter- linkages of various markets such as Equity, Forex, and Commodity etc.
  Increasing its efforts in the areas of investor education/financial education and ensure that it covers all the districts in the country.
  Enhancing engagement in the social and digital media for investor awareness programmes.

Offshore Derivative Instruments (ODIs)

2. The Board was informed about the various aspects of ODIs and the various steps taken by SEBI after September, 2014, The Board noted that in view of the strict norms for ODI issuance, the notional value of ODIs to the AUC of FPIs has declined over the years from a high of 55.7% of total asset under custody (AUC) in June 2007 to 6.7% in December 2016. The consistent tightening of ODI norms by SEBI has not only been through increased compliances but also improved transparency. It was also noted that simultaneous liberalization by SEBI in registration process of FPIs has made ODI less attractive vis-à-vis taking direct registration as FPI.

Review of regulations and relevant circulars pertaining to Market Infrastructure Institutions (MIIs) viz., Stock Exchanges, Depositories and Clearing Corporations

3. The Board noted the recommendation of Dr.Bimal Jalan Committee to review the working of MIIs after five years.

After deliberation, the Board approved the proposal for comprehensive review of Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 and SEBI (Depositories and Participants) Regulations, 1996 and to seek public comments on the same. The consultative paper seeking Public Comments on the above will be made available on SEBI website.

Complaints against NSE's co-location facility

4. The Board took note of the information memorandum on various references received related to colocation facility of NSE and the examination carried out by SEBI under the guidance the Technical Advisory Committee (TAC) of SEBI. As advised by SEBI, NSE's Board has also undertaken an independent forensic audit on the matter. The Board also took note of steps taken by SEBI in consultation with TAC to strengthen the exchange's trading infrastructure in the areas namely, fair and transparent data dissemination process, tools to monitor service quality of data feeds, mechanism to manage system load in a fair manner, direct connectivity between colocation facilities of exchanges, etc. The concerns related to systems and processes at the exchange arising out of examinations are being addressed in consultation with TAC and NSE's Board.

Role of SEBI in NSEL matters

5. The Board was appraised about the actions so far taken by SEBI against some of the brokers on the basis of examination of allegations received with respect to their role in NSEL matters.

Other Items

6. The Board was apprised of the developments with respect to steps taken by SEBI in connection with International Financial Service Centre, status of compulsory delisting of long suspended companies and companies on the dissemination board of National Exchanges etc. The Board was also appraised of the process of SEBI Settlement of Administrative and Civil Proceedings and the reasons for pendency of various applications thereon, for more than two years.

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