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SEBI rejigs buyback, IPO norms; takes action in NSE probe over servers
Photo Credit: Reuters

The Securities and Exchange Board of India (SEBI) has eased several rules pertaining to public offerings, besides initiating enforcement action against entities in a controversy involving the National Stock Exchange.

The capital markets regulator has cut the time for announcing the price band of a public offering to two days prior to opening of the issue compared with five days, it said in a statement after a board meeting.

It has also relaxed the requirement of financial disclosures to three years from five years earlier.

Besides, the regulator replaced the erstwhile framework for buy-back of securities with a new set of rules for share repurchases. The decision follows a discussion paper it had issued in March.

Aditya Cheriyan, partner at law firm Khaitan & Co., said that the changes to the Issue of Capital and Disclosure Requirements Regulations gets rid of a lot of “archaic” disclosure requirements and helps make disclosures in an offer document more meaningful for an investor to take an informed decision.

“A reduction in the time period between advertising the price band and issue opening would help issuers price deals better in a volatile market,” he said.

Separately, SEBI chairman Ajay Tyagi said the regulator has been inspecting the NSE co-location case and will complete enforcement actions against entities involved in alleged irregularities pertaining to high-frequency trading and providing unfair access to select operators.

“We have received the NSE investigation report in the co-location case...and initiated enforcement actions,” Tyagi told journalists after the board meeting.

The NSE had revealed in December 2016 that an independent agency had found potential instances where some brokers were given unfair access to its servers. The NSE said the agency had found certain employees might have been involved in providing that access, though it could not determine whether it constituted collusion. The development delayed the NSE’s IPO and led to a top-level reshuffle.

SEBI also made changes to norms related to takeover, and ownership of market infrastructure institutions such as stock exchanges, clearing corporations and depositories.

Takeover Code

The SEBI board approved some amendments to the Substantial Acquisition of Shares and Takeovers (SAST) norms. These include giving additional time to make an upward revision to the open offer price. Companies can now revise the open offer price till one working day before the share tendering period.

The amendments are aimed at simplifying the language, removing redundant provisions and inconsistencies, and updating the references to the Companies Act, 2013 as well as other SEBI Regulations, the regulator said.

Ownership of market infrastructure institutions

Eligible domestic and foreign entities, including multilateral and bilateral financial institutions notified by the government, can now own up to 15% in stock exchanges, depositories and clearing corporations.

The board accepted recommendations of the five-member Gandhi Committee to bring parity in the shareholding and ownership limits of market infrastructure institutions by foreign and domestic institutions. The committee was headed by former Reserve Bank of India deputy governor R Gandhi.

Sub-brokers

SEBI discontinued the category of sub-brokers as a market intermediary, giving such entities either an option to migrate to become trading members or surrender their registrations. The regulator said it will permit a “suitable” time period to facilitate this transition.

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