The Securities and Exchange Board of India (SEBI) will consider a sweeping set of measures at its board meeting on September 12. These include tighter rules on the roles and outside directorships of managing directors at MIIs, modifications to client codes for institutional and non-institutional trades, rationalisation of mutual fund categories and permissible activities for asset managers.
Other key items on the agenda may include relaxations in minimum public shareholding rules for large IPOs, listing obligations and disclosure requirements, related party transactions, flexibilities to large value funds for accredited investors, and past performance declaration norms for research analysts, according to sources.
The board might also discuss updates from its conflict-of-interest committee, headed by retired IAS officer Pratyush Sinha, which was to submit its report to the board by the end of July. The committee, tasked with reviewing the 2008 code of conduct framework to identify gaps in SEBI’s conflict of interest disclosures, has been seeking recommendations and comments from across the industry.
MII governance
The board is expected to approve a long-pending proposal of strengthening the governance at market infrastructure institutions (MIIs) through mandatory appointment of two executive directors (EDs) of appropriate stature and independence as heads of the first two verticals, who will also sit on the governing board.
The regulator is expected to offer a staggered implementation where the first ED may be appointed within six months of the circular, and second ED appointment may take nine months, sources said.
The board may also clear tightening the roles and responsibilities of the managing director (MD), EDs, chief information security and chief technology officers, which will include those areas specified by National Critical Information Infrastructure Protection Centre (NCIIPC) from time to time. It may also allow the MD of an MII to be appointed as non-executive director for a Section 8 or government company not involved in any commercial activity, including educational institutions and universities.
Client code modifications
The board may also ratify client code modifications from market makers to the AMC, namely the associated ETF scheme(s), without levying penalties. Exchanges may allow multiple client codes linked to the same PAN for a list of certain client categories, which will be formulated by the industry standards forum.
For FPIs, modification of client codes or obligation transfer request (OTR) allocation may be allowed for different PANs within a FPI group/family managed by the same investment manager.
OTR allocation for all institutional categories will also be monitored for change in beneficial ownership. Further, in order to accommodate genuine errors, the waiver given to a stock broker for modification in a client code may be increased from once in a quarter.
An email sent to SEBI did not elicit a response.