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The Securities and Exchange Board of India (SEBI) called a press briefing on July 24, where key updates were shared. Here are the highlights.
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"On instantaneous settlement, we need a little more work. IfASBAgoes smoothly, then the next step isinstantaneous settlement...not sure if this will be completed by this financial year," SEBI chief Madhai Puri Buchsaid.
"There will be a Rs 33,000 crore debt backstop fund...On Friday, the Finance Minister (Nirmala Sitharaman) will be coming to inaugurate that," SEBI chief Buch said.
"The current arrangement (in regulations) will continue, if standards can be improved, we will welcome it (suggestions)," Buch said, while adding that there is anew mechanism to implement regulation, and not a mechanism for deferment of regulations.
Earlier during the press conference, the SEBI chief had talked about a new regulatory design. "Essentially, this new element in the regulatory design is as follows: We have seen over the last many months that as we bring out various regulations or modify various regulations, we find that at a policy level we have a lot of valuable inputs that comes to us from advisory committees and public consultation. We get a lot of input, we take that and create our regulation, then public consultation and we approve it."
"However when they are implemented, we find that two things happen. One is that a lot of queries come to us on how are these supposed to be implemented...andwill this be adequatelycompliantetc. First we tried to explain this through FAQs and more detailed circulars. On deeper reflection, we came to the conclusion that what we are dealing with is standard setting for implementation... this is not the regulation but about implement. This task is done by industry bodies themselves," she added.
"Now our regulations will take us to a certain stage of expressing regulatory intent and what is to be done, but a lot of ease of doing business lies in the details of how to implement," she further noted.
"We had a consultation paper out on tracking UPSI, we realised that there will be more UPSI events... so a good trading plan is all the more essential.By end of August we should have a consultation paper soon... to make this trading plan easier," SEBI chief said.
"Before December, there might a consultation paper out," SEBI chief Madhabi Puri Buch said, adding that currently, SEBIhasa reverse book building and the moment you touch 90 percent, "you arrive at a price... industry has been telling us that they have found certain problems there".
In reverse book building, theconcern is that certain constituents in the market, in anticipation of delisting, acquire those shares in a concerted bid to cross 10 percent so that they are not able to cross the 90 percent, "and then to cross the 90 percent, the price is jacked up... which is unsustainable".
"It is a question of looking at the bids and seeing what happens to the bids as it comes closer to the delisting," Buch said, adding, "Sometimes, there is a difference between an investor getting a fair value and extracting more value... we need to balance out the requirements of both.
"...our regulations will take us to a certain stage of expressing regulatory intent and what is to be done, but a lot of ease of doing business lies in the details of how to implement," Buch said, in response to a query.
"Example on where we are headed: Let's take for instance one of our circulars on rumour verification. The regulation in the circular conveys the intent of saying that if there is a rumour in the market... it is there and making the price move, then the company needs to come in and verify that rumour.That is a regulation that no one has a dispute about... but the challenge is how to implement it.What we understood is that most corporates already has a media-tracking service... it is already there. Is it our desire as a regulator that they invest hundreds of crores to invest in a parallel system? Of course not!" she told reporters.
"We think this is a very, very important mode for capital formation in markets going forward," she said, adding thatREITs and InVITs are permitted leverage, in order to give sponsors ability to exit and facilitate professional investment managers to emerge.
"In Sebi, we don't like Abhimanyus, nobody should feel that once they get in, they cannot get out. Therefore, we introduced a framework for voluntary delist," SEBI chief Madhabi Puri Buch said, while commenting on the framework for voluntary delisting.
"There has been lot of attempt in the ecosystem on how to bring in more liquidity in the bond market... retail participation was nil. Online bond platforms were springing up but they came with risks," Buch said. "Our objective was to really facilitate what was organically evolving in the market and put risk-mitigation measures, so that the foundation is strong," she added.
"In terms of debt issuances, there was a raft of reforms...most of them developmental in nature," she said. "People who are frequent issuers (debt), every time they wanted to come to market and make six or seven issuances, every time it was the same process...the value additionwas nil. So, we moved to general information document for the year, and for each issuance it was a slim, simple document filing, to go away with multiple filing and costs," he added.
"If there is no significant risks perceived in certain ways of doing things, then why not give that flexibility to the market," she said, on being asked about the regulator's view on flexibility in minimum public shareholding norms.
