Mumbai: The budget last year made a number of announcements to boost sentiments in the capital markets. If the rally in capital markets all through last year is any indicator then one can say that the government succeeded in keeping sentiments soaring, barring a few hiccups. In spite of profit booking two days ahead of the budget, the Sensex managed to stay ahead of the crucial 36,000 mark and Nifty ahead of the 11,000 mark.

Here’s a low down on the capital market reform measures that worked and ones that got stuck due to regulatory overlaps.

Developing the commodity derivatives market

Union finance minister Arun Jaitley, in last year’s budget, announced the integration of the securities and commodities markets by allowing brokers to trade in both. Capital markets regulator Securities and Exchange Board of India (Sebi) cleared the decks and paved the way for integration in September last year.

In fact, Sebi went a step ahead and also announced universal exchanges which will trade in both equity and commodity starting October 2018. Sebi also cleared regulatory hurdles in the launch of options in select commodities and Multi Commodity Exchange Ltd (MCX) was able to launch the first gold option ahead of Diwali. Though the volume of gold options are lower than expected, but reforms in commodity markets followed a fixed timeline.

Tackling illicit deposit taking schemes

A budgetary proposal in 2016-17 and 2017-18 to tackle the menace of illegal money pooling schemes through a comprehensive central legislation failed to cut ice due to state governments’ failure to pass the legislation. The draft of Banning of Unregulated Deposit Schemes and Protection of Depositors’ Interest Bill was amended and other attempts were made to make it acceptable to all stakeholders as part of Narendra Modi government’s “Clean India" initiative. Hopefully, this year the centre is able to move towards getting the legislation passed.

Listing of securities receipts of ARCs

In the meeting of its board on 28 December, Sebi approved the proposal of allowing listing of securities receipts issued by asset reconstruction companies (ARCs) on stock exchanges. A private placement, rather than a public issue, is the market regulator’s favoured route to start trading these instruments. Only certain “qualified buyers" will be permitted to trade in them, and the minimum lot size will be Rs10 lakh. The intention is to allow only informed investors to trade in these securities. Though Sebi has approved the norms, these are yet to be notified. These are expected to improve liquidity in the securitization industry and help speed up the resolution of stressed assets in the banking system.

Listing and divestment

The government is all set to beat the divestment target of Rs72,500 crore. The government has fallen short of the divestment target for the past eight years, only this time it is meeting the target. The government divested Rs14,500 crore through strategic sales. However, the market was not able to see the shares of railway public sector enterprises such as IRCTC, IRFC and IRCON being listed on stock exchanges.

Single-window clearance for FPIs

The Union budget for 2016-17 had proposed a single-window clearance for foreign portfolio investors (FPIs), but such a mechanism is far from ready because of differences between Sebi and the Central Board of Direct Taxes (CBDT). While Sebi is in favour of reducing documentation, CBDT wants to stick to its own set of documents, including an incorporation document and Foreign Account Tax Compliance Act (Fatca) documents.

Ease of doing business

The budget had announced that all the application forms for market intermediaries will move online and they did. However, the desired results are yet to be achieved as the market players are now burdened with dual fillings—once online then offline—and this has doubled the processing time.

Abolishing of FIPB

The finance minister had announced the abolition of the Foreign Investment Promotion Board (FIPB), the nodal agency that vetted overseas investment applications, aimed at hastening fund flow into the economy. It was abolished in May last year.