SEBI profoundly known an Security Exchange Board of India which a regulatory stature which supervises the stock market announced that their board will have a meeting about certain listings and de-listings on the NSE (National Stock Exchange).
“There was a popular belief that we will never review the delisting regulations and we will always stay with the reverse book building process. We have a consultation paper that was floated, we have got a lot of feedback and at the next board meeting we are taking that proposal to our board,” Buch said.
Similarly, she said it was widely believed that SEBI is “very dogmatic about insider trading” but the regulator has initiated a relook into the same by initiating consultation.
All these are part of efforts to “eschew dogma”, Buch said, adding that SEBI is focusing on data and backtesting the data to drive regulations. She said the regulator is fine delaying a decision by a few weeks if need be, but made it clear that no regulation will come out sans data and its analysis.
The regulator is adopting a more consultative approach to regulations in the dynamic market landscape, she said, pointing out that a third of the 167 circulars it issued last year have gone through public consultations.
Meanwhile, when asked about trading platforms facing outages, Buch said SEBI has a system where an investor can directly go to an exchange website if a broker is offline.
“If you’re a regular trader who is influenced by minute to minute fluctuations, then you need to diversify risk, open an account with two brokers,” she advised.
What is the main agenda for SEBI’s meet?
SEBI could mull over debuting a new price mechanism to delist a stock. This motive has been on considerations ever since the August meeting.
The idea behind this move is to stop market manipulation at the time of delisting as a few cases of malpractices have come to the fore. A fixed price mechanism for the delisting of a stock was suggested in the consultation paper. Apart from this, the other important aspects related to delisting are also likely to be taken by the SEBI board, ET Now reported.
However, this is just an option against the current process of reverse book building, the report said. It is expected that SEBI will take up at least a dozen agendas including the issue of MSM REITS where one can own a portion of shares of real estate by investing Rs 10 lakh or more.
This is to promote more REITS in the market, the report said further. Another issue that may be taken up during the meeting is cyber security.
In an unrelated development, SEBI also plans to ease regulations that will give better flexibility to key managerial personnel (KMP), who typically possess unpublished price-sensitive information (UPSI), for trading shares of their company.
SEBI’s insider trading regulations prohibit such personnel from trading in shares given that they have access to UPSI which is not publicly available.
However, SEBI has received a lot of feedback from the market, suggesting that the current regulations are onerous and consequently, trading plans are not very popular.
“If the price of the security, during execution, is outside the price limit set by the insider, the trade shall not be executed. If no price limit is opted for, the trade has to be undertaken irrespective of the prevailing price,” the regulator said in its consultation paper.
The committee has further recommended that disclosure of the trading plans to stock exchanges may be done within two days from the date of approval of the same.
What is REITS? The one thing SEBI is so keen to promote in the market?
A Real Estate Investment Trust (REIT) is an investment instrument that offers proportionate ownership of an income-generating real estate asset to retail investors. Historically in India, investors have been investing in real estate by purchasing a property or land via real estate developers and property brokers.
In such investments, investors had to rely on long-term market value appreciation of the property to generate a return on investment. This, however, was only possible when real estate markets would be on an upswing.
Developers also had to fund projects by sourcing money through loans from banks, PE firms, etc and this usually meant high-interest rates.
In 2008, the Security and Exchange Board of India (SEBI) came up with draft guidelines that allowed investors to establish REITs as an asset class. The intent was to make it easier for foreign investors to invest in the Indian real estate market and make funding easily available for local developers.