BackSebi considering multiple steps to reboot economy : Sebi Chairman
The Sebi Chief further mentioned that the recovery in capital markets after the initial hit by the pandemic has been broad-basedebi had met all stakeholders two weeks earlier on T+1 settlement
PremiumMUMBAI : The Securities and Exchange Board of India (Sebi) Chairman Ajay Tyagi says the capital markets regulator is considering taking multiple steps to rebooting economy through financial market reforms.
Sebi Chairman believes that development of bond markets is necessary to help the Government to achieve its target of investment in Infrastructure.
“It would be a challenging task to achieve the Government’s target of achieving ₹100 trillion investment in Infrastructure by 2024-25 unless the bond market is adequately developed," said the Sebi Chairman, Shri Ajay Tyagi while addressing the Inaugural session at the 11th edition of the CII Financial Markets Summit which is being organized on 21-22 October.
The Sebi Chief further mentioned that the recovery in capital markets after the initial hit by the pandemic has been broad-based. “We have observed that recovery has been broad-based. It is not only the large cap, but the mid and small cap shares have also recovered since the low hit in March 2020," Shri Ajay Tyagi said. The corporate bond market needs to become more robust because there is an urgent need to diversify funding requirements from the banking sector, the Chairman said.
The Sebi Chairman said that “early settlement is in everyone’s interest and we are aware about the issues around early settlement". For reducing defaults by brokers, Sebi needs to bring down the settlement timeline for equity trading from the current T+2 to T+1, T being the Trading Day. For this, the regulator has initiated talks with exchanges, clearing corporations, custodians and participants. Sebi had met all stakeholders two weeks earlier on T+1 settlement. All have agreed to the proposal, except Foreign Portfolio Investors. It feels that it creates unnecessary pressure on FPIs and custodians. FPIs feel that this measure would curtail trading volumes in the cash segment as they would require a longer timeline for settlement. FPIs account for more than 30 percent volumes in the cash market.
On Reforms undertaken by SEBI, policy measures contributed in facilitating rather satisfactory working of both the primary and secondary markets in these gloomy and uncertain times. For fund raising, relaxation of eligibility criteria for fast track issuances, rationalisation of disclosures, relaxation from minimum subscription requirements, etc.
For preferential allotment, companies for a specific period to address pandemic situation, we also introduced permanent relaxation from the pricing norms for preferential allotment by stressed companies. The relaxation for stressed companies is also accompanied by an exemption from open offer requirement thereby reducing the funding pressure on the prospective investors in such companies.
With concluding, Sebi Chairman said "A well-functioning, deep and robust financial market is a must for economic development. ‘Reform’ is a continuous process and is best brought in consultation with all stakeholders. Rather than believing that ‘crisis begets radical reforms’, and of the view that we should continuously endeavor to keep improving our systems so that crisis, in fact, begets no radical reforms.
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