Thursday, June 21, 2012

Business standard updates 22-6-2012


Sebi mulls separate listing norms forcompanies

BS REPORTER
Mumbai, 21 June
Listing norms for companies are set to get tougher. In the wake of losses to equity investors due to the poor quality of initial public offerings and companies being suspended from stock exchanges, the Securities and Exchange Board of India (Sebi) has decided to prescribe minimum listing standards.
It has said it would set up a committee of experts to assess the feasibility of a single clearing corporation (CC) or allow inter-operability among multiple CCs. It is to also amend the regulations governing depositories, to cover their ownership and governance norms.
A CC takes care of clearing and settlement operations, which involves payment obligations of buyers and sellers, after trade matching and execution of orders is done on a stock exchange. Depositories are like banks, where shares are kept in electronic form.
Currently, both the Bombay Stock Exchange and National Stock Exchange have separate CCs, fully owned by them and with no inter-operability. Trades done on both exchanges are settled through their own CCs and both are trying to consolidate their clearing and settlement business, as is the global trend.
According to market players, having a single CC is likely to benefit investors. “Right now, if the investors have a sell exposure on a CC and a purchase exposure on the other, they have to pay a margin at both CCs. A single CC will eliminate the need for a double margin and mainly help day traders,” said one.
Recently, Sebi had also asked exchanges to bring down the shareholding in their respective CCs to 51 per cent and asked them to infuse more capital, a move criticised by many. However, now that a committee will be set up to look into operational aspects of CCs, exchanges will have to wait and watch. The committee will also specify norms for utilisation of profits and investments by recognised CCs.
Further, to resolve all conflict of interest issues among market infrastructure companies, Sebi has decided to form aConflicts Resolution Committee (CRC), with a majority from external and independent members. The CRC will consider matters of policy, guidelines involving conflict issues and recommend standards that are pertinent to the areas of potential conflict in the exchanges. These issues, said Sebi, will be referred by exchanges or may be taken up by the CRC on its own initiative.
The independent oversight committees of the exchanges for member regulation, listing functions and the trading and surveillance function, will have regular interaction with the CRC, said Sebi. It has also proposed to frame norms for adequacy of the core corpus of the Settlement Guarantee Fund and the Trade Guarantee Fund.



To set up expert committee to assess operational changes for clearing corporations
Both the BSE and NSE have separate clearing corporations, fully owned bythem and with no inter-operability
Click: Article continued from… New norms to aid

New norms...

For a stock exchange that is not listed, a foreign institutional investors (FIIs) may acquire shares through transactions outside of a recognised stock exchange, provided it is not an initial allotment of shares; and for listed bourses, the FIIs can transact through the exchange where the shares are listed.
Sebi said that a recognised stock exchange may apply for listing of its securities on any bourse other than itself and its associated stock exchange, provided they comply with the new regulations of ownership and governance and the exchange has completed three years of continuous trading operations and received Sebi’s approval.
Also, the shares of a recognised stock exchange and a recognised clearing corporation would have to be in demat form, while clearing corporation cannot hold any right, stake or interest in an exchange.


Regulator seeks more teeth to curb insider trading offences

BS REPORTER
Mumbai, 21 June
To bring to book those suspected of insider trading, the Securities and Exchange Board of India (Sebi) has sought more teeth for its investigation capabilities, similar to those in the United States.
In the background of the conviction of Indian-origin ex-Goldman Sachs director, Rajat Gupta, on charges of insider trading, Sebi has felt the need to have access to call records to nail those involved in such grave offences.
When questioned on why those suspected of insider trading are not brought to book in India, unlike in the US, Chairman U K Sinha said, “US regulations allow wiretapping. The evidence in a majority of insider trading cases in US have been obtained by way of wiretapping. In India, Sebi has no such powers.” Wiretapping, or telephone tapping, is the process of monitoring telephone conversations by a third party, mostly an enforcement agency.
In the US, prosecutors used details of telephone conversations and emails to convince jurors that Gupta had leaked boardroom secrets to his former friend, hedge fund manager Raj Rajaratnam, currently serving an 11-year sentence for insider trading.
Sinha said the legal situation in India was different from the US. He said insider trading offences can be curbed with the use of technology. Though insider trading is believed to be rampant in India, there has been little effective action against it, due to lack of analytical tools in the hands of the regulator.
For several years, Sebi has been requesting the government for access to call records. But this request has not yet been accepted.
Turn to TSI, Page 3 >CRIME STATS: MANIPULATORS COULDN’T CARE LESS
Enforcementagainstinsider trading is considered ineffective in India
Data for 2010-11; Source: Sebi annual report
60 50 40 30 20 10 0 MarketManipulation andPriceRigging
Investigations taken up Investigationscompleted
Capital“Issue” relatedManipulation InsiderTrading Takeovers
56 51 2 6 28 15 4 4

Click here to read more...Turn to TSI, Page 3


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