In a board meeting held today, the regulator also reduced the time taken for a security to list on an exchange to three days (T+3) from the date of closure of its initial public offer (IPO). It also allowed foreign investors’ participation in India’s commodities market.
“Foreign portfolio investors will now be allowed to deal in all commodities except sensitive ones,” said Sebi Chairman Ajay Tyagi. He added that this will help for better discovery of prices in-line with global commodity markets.
Besides, the market regulator said the mutual fund expenses will be brought down considering economies of scale. Tyagi insisted there were no discussions on extended trading hours for stock exchanges in Tuesday’s board meet.
As per the sources, the Sebi board, meanwhile, accepted proposals submitted by Justice Dave panel.
The panel proposed a widening scope of Sebi consent or settlement mechanism. These include the panel proposal to bring in the concept of confidentiality under the consent mechanism. The panel said that multiple consent pleas post the initial rejection must be avoided; it proposed wilful defaulters or fugitive economic offenders not to be considered for consent or settlement mechanism. Besides, serious market violations such as insider trading should be considered under the mechanism.
Earlier this month, Sebi had initiated a public consultation process for finalising the new guidelines relating KYC and beneficial ownership norms.
The market regulator had in April stirred a hornet’s nest, when it asked Category II and III FPIs to provide a list of their beneficial owners (BO) in a prescribed format within six months.
The Sebi April circular said beneficial owner (BO), who ultimately owns or controls an FPI should be identified in accordance with rules on prevention of money-laundering. It said that foreign funds where one or more NRIs, OCIs and PIOs have controlling ownership interest of 25 per cent in case of a company and 15 per cent in case of partnership firm, trust & unincorporated association of persons, would be considered as BO.
Besides, the circular said any investment from “high-risk jurisdictions” would attract a lower threshold of 10 per cent for identification of BO.
For this, the market regulator asked Category II and III FPIs to provide a list of their beneficial owner (BO) in a prescribed format.
FPIs insisted that the Sebi move will lead to disqualification of a number of foreign funds majorly controlled by non-resident Indians (NRIs), overseas citizens of India (OCIs) and persons of Indian origin (PIOs).
FPIs, under the banner of Asset Managers’ Roundtable of India (AMRI), were lobbying hard to get the proposed changes to KYC norms withdrawn. They claimed some $75 billion FPI money will move out of India because of the regulatory move.