Mumbai: The Securities and Exchange Board of India (Sebi) on Thursday will tackle no less than 17 agenda items and almost half of them will have a deep impact on stakeholders. This would be the heaviest agenda for chairman Ajay Tyagi since he took over in March. Sebi will lean mostly towards transparency and do its bit in tackling the debt pile-up. Here is a quick look on what is expected.

Default disclosure

This is perhaps one of the bolder moves by a market regulator, In August, Sebi had mandated that listed companies disclose their status of default within a day to stock exchanges. The regulator consequently withdrew the directive on 30 September, a day before it was to take effect, on “technical grounds". The regulator on Thursday would take a second crack at it and diluted version of the directive could be put up for stakeholders. The new version could make some allowances for technical defaults conceding to a demand of the banking industry. This is to enable information arbitrage between bankers and equity investors.

Credit rating agencies

Furthering its stand on transparency, the regulator will increase the administrative and governance standards at credit rating agencies. To stem abrupt rating suspensions and withdrawals, a rating agency would be allowed to suspend ratings if it had been rating the instrument for five years or 50% of the tenure of the instrument. Net worth requirement for the ratings agencies would also be increased from the current Rs5 crore. A cross holding cap of Rs10 crore of individual investors is also in the offing.

Entry norm for FPIs

The board will expand the list of eligible jurisdictions to grant registration to FPIs, rationalize “fit and proper" criteria and simplify regulatory requirements. The move is aimed at improving direct registrations and shun the P-note route. FPIs had holdings worth $418.81 billion in Indian stocks at the end of 30 September. That accounted for 18% of India’s $2.3 trillion market capitalization.

Listing of receipts of ARCs

In the board meeting, Sebi will take up listing of receipts issued by asset reconstruction companies (ARCs). This is a budgetary proposal. In the Union budget for the current fiscal year, finance minister Arun Jaitley had proposed a plan to make security receipts tradable on stock exchanges to enhance capital flows into the securitisation industry and solve the bad loan problem plaguing the banking system. Sebi may allow alternative investment funds (AIFs) and qualified institutional buyers (QIBs) to buy security receipts issued by ARCs.

Improving governance and shareholding norms for fund houses

Mutual funds are drawing in good investments and this is the time when we usher in better reforms and standards, said whole-time member G. Mahalingam, in a recent industry event. Going by this philosophy, Sebi is expected to have cross holding cap of Rs10 crore. This would have an impact on UTI AMC which has holdings from State Bank of India, Punjab National Bank, Bank of Baroda and Life Insurance Corp. of India (LIC) when they have their own fund houses. New norms for shareholding will also impact the fund houses that are yet to meet the minimum net-worth criteria of Rs50 crore. The deadline for meeting the criteria expires in March this year.

Investment advisors regulations

Once the Sebi board approves the new norms, a mutual fund distributor may not be allowed to offer any advice but can only suggest a product suitable to an investor’s profile.

Minimum public shareholding

The Sebi would also relax the norms to achieve minimum public shareholding of 25% through qualified institutional placement (QIP).

Brief the board on ongoing WhatsApp leak probe

The board would also be briefed on the ongoing probe of leakage of financial results and other key earning on WhatsApp groups before they are made public. Sebi on late Wednesday evening had passed a directive against Axis Bank after it found that the leak was accurate when compared to earnings made public. Last Friday, Sebi had conducted raids on 31 brokers and analysts in relation to the probe.

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