The Securities and Exchange Board of India (SEBI) proposed sweeping changes on Wednesday to the administration of stock exchanges and clearing corporations, as well as the merger of investor protection funds for the equity and commodity derivatives segments.
Some of the key proposals include evaluating the performance of public interest directors, introducing timelines for the norms applicable to exclusively listed companies, and removing several obsolete requirements.
Single IPF
As reported by businessline earlier, the regulator has proposed merging the IPFs for the equity segment and the commodity segment of the exchanges to constitute a single IPF.
A single IPF would result in the simplification of the requirement for the exchanges. However, the merger of IPFs will be subject to maintaining similar funds available to spend from IPF for predominantly Commodity Derivatives segment exchanges, the proposal said.
Net worth maths
SEBI has proposed segregating and demerging the investment policy and liquid assets for the purpose of calculating the net worth of a clearing corporation from that of an exchange.
The regulator stated that the current form of a single regulatory requirement for exchanges and clearing corporations has its genesis in the legacy of CCs functioning as fully owned subsidiaries of exchanges. “However, in light of increasingly segregated roles of CCs, especially with the introduction of interoperability, separate Clearing member registration by CCs, amongst others, needs to be felt for segregation of compliance norms.
Several provisions relating to the standard operating procedure for suspending trading and handling clients’ securities by trading members are proposed to be segregated and demerged from the master circular for stock exchanges and clearing corporations.
Comments and suggestions on the consultation paper are to be submitted by October 29.