India's share market regulator Securities and Exchange Board of India (SEBI) plans to revise the rules on insider trading and front-running, as it gets down to synchronising the rules with those set down by the central government in the Companies Bill, which was approved by the Lok Sabha a fortnight ago.
Set of Rules..!
The SEBI has its own set of rules on insider trading and front-running, but with the Companies Bill also incorporating provisions barring forward dealings in securities by a director of a company or key managers such as the CEO, MD, chief financial officer or / full-time directors, and buying or / selling shares based on price sensitive information which is not public, the regulator SEBI wants to carry out the necessary changes too.
The minute the Companies Bill is approved, we will revise the insider trading regulations, a senior official who spoke on condition that he will not be named, said. The new Companies Bill was approved by the Lok Sabha last month & will now need the assent of the Upper House of Parliament or / the Rajya Sabha. These revisions & measures to boost the local bond market are high on the agenda of the regulator this year, the official said.
SEBI plans to build on several steps it had taken in 2012, such as changes in enforcement action - a transparent set of rules for consent orders or / the process of settling claims through negotiations and by paying a fine - introduction of the pre-market call auction, which has helped curb volatility on the opening day, putting pressure on merchant bankers and issuers on pricing offers competitively, leading to greater discipline on pricing,allowing electronic IPOs and regulation of stock exchanges.
Window for Offer for Sale..!
According to officials in stock exchanges & senior bankers, the newly introduced window for Offer for Sale or / OFS has helped revive the market for primary market offerings. With the regulator staying firm on not easing the deadline of June 2013 for listed companies to ensure a public holding of at least 25 per cent, 20 companies have complied with this rule.
With the regulator holding talks with above 100 companies across India, more issues are set to hit the market in the next few months. For India to be counted as a credible market, corporate governance has to be of a high order. Going forward,it has to be a signal to the outside world that there has to be more floating stock in the Indian markets he said.
Although private corporates are the ones who are now in the process of divesting shares to meet the 25 per cent norm,state run companies too are expected to follow suit, with the finance ministry indicating its support after the regulator took up the issue with the finance minister & the cabinet secretary.
The last few primary market offerings have done well, thanks to better pricing. SEBI Chairman Mr. U.K .Sinha has been very critical of the role of merchant bankers, and at a recent function compared them to match makers in the matrimonial business.
Code of Conduct for Investment..!
Last year (2012), the SEBI made it mandatory for merchant bankers to make available to investors their track record, besides evolving a code of conduct for investment bankers.The official said that one of the problems on the enforcement front was lack of consistency and transparency.
With the introduction of a new set of rules for calculating settlement charges, over the past seven months, SEBI has rejected 150 applications including those from some top corporates for settling cases of violation of securities market regulations, compared with 60 to 70 cases earlier, he said.
A consolidation of stock exchanges also appears to be under way, with three bourses -- Hyderabad, Coimbatore & Saurashtra getting approval for winding up, in line with the rules introduced in 2012.
The guidelines introduced past year for governance of stock exchanges, based on the Bimal Jalan committee recommendations, have led to a couple of stock exchanges led by the Bombay Stock Exchange (BSE), beginning the process for listing. What we want to do is to take measures quietly, without making big ticket announcements, and ensure more accountability and transparency in the organisation, the official said.
SEBI had also started consultations with professionals in the bond market to consider measures to boost trading.
Src: ET
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