Informist, Wednesday, Mar 29, 2023
–SEBI: Providers of all indices used in India to come under SEBI norm
–MSCI to come under new SEBI norms
–Will not allow another Karvy-like episode in the market
MUMBAI – The Securities and Exchange Board of India today decided to introduce Application Supported by Blocked Amount facility for investors trading in the secondary market. At present, this facility is available only to investors in the case of primary issuances.
The market regulator has also decided to make it compulsory for brokers to upstream client funds to clearing corporations at the end of every day in order to mitigate the risk of potential misuse of client funds. This framework will be made applicable in phases with the first getting implemented from Jul 1.
SEBI has also decided to tweak regulations applicable to stock brokers to provide an institutional mechanism for prevention and detection of fraud or market abuse by brokers. The tweaks will encompass systems for surveillance of trading activities and internal controls, fix obligations of stock brokers and its employees, escalation mechanisms, and whistle blower policy.
SEBI is also set to come out with a new regulatory framework for index providers to bring about accountability and transparency in index administration and governance in the securities market. SEBI Chairperson Madhabi Puri Buch also clarified that a foreign index provider will be covered in this framework in case it has an index containing Indian securities and if that index is being used by domestic investors or domestic mutual funds.
Under the ASBA-like facility for secondary market trading, SEBI said that the client will continue to earn interest on his blocked funds in his savings account till the time his settlement amount is debited. It would also mean his trade gets directly settled with the clearing corporation without passing through the pool accounts of the brokers. This will also provide client level settlement visibility to clearing corporations, SEBI said.
The market regulator has also decided to extend the conciliation and arbitration mechanism currently used by stock exchanges, clearing corporations and depositories to resolve disputes between brokers or depository participants with clients, to all market intermediaries and their clients. End
Reported by Rajesh Gajra
Edited by Ashish Shirke
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Source: Cogencis
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