Lok Sabha Question No. 178 (UNSTARRED), answered on 2017-12-15
Subject: Reforms in Primary and Secondary Securities Market
Ministry: FINANCE
Asked by: OM BIRLA

## I78. SHRI OI\'I BIRLA:

Will the Minister oifnla-rvCf Ue pteased to state:

- (a) the details as to the reforms  introduced by the Securities and Exchange Board of India (SEBI)  in the primary and secondary  securities market during the last four years;
- (b) whether the Government has also initiated  reforms  conducive for safe and better investment  environment and plans  to push rules for the merger ofmutual firnds and common  investment  plans and ifso, the details thereof;
- (c) the  intended benefit and impact  ofthe  above step as envisaged by the Government; and
- (d)  whethel'there has been an increment in tl're activity of insider trading in the recent  years and as a result  of which the SEBI  is also considering  the complete overhaul of tlie insider  trading  and disclosure  norms and if so, the details  thereof?

## Ah.SWER

## MINISTER OF STATE  II{ THE MINISTRY OF FINANCE (SHRI PON RADHAKRISHNAN)

(a): Some of the major reforms htroduced  by the Securities  and Exchange  Board of India  (SEBI)  during the Iast four years (Financial  Year 2014-15 to date) are the following:

- i. Amendments to Clause 49 of the Listing Agreement  to align the provisions  of the Listing Agreement with the provisions  ofthe Companies Act,20l3 and to sfiengthen  the corporate  governance  framework for listed companies  in India.
- ii. Amendments to SEBI (Delisting of Equity  Shares) Regulations,  2009 for reducing the timelines  for completing  the delisting  process from 137 calendar  days to 76 working  days.
- iii. Introduction  of system-driven  disclosures to elirninate tlie possibility  of inadvertent violations by entities and reduction of compliance  burden.
- iv. Streamlining  the public issue process  by mandating  Applications  Supported by Blocked Amount (ASBA)  in public  issues  and reducing  listing timeline from  T+i2 days to T+6 days.
- v. Restrictions  imposed  on promoters  and Whole-Time Directors of compulsorily  delisted  companies, pending fulfilment ofexit offers to the shareholders.
- vi. Mandating  the appointment  of Monitoring  Agency  for monitoring  the utilisation of issue proceeds in cases where the issue  size  is more than Rs. 100 crore.
- vii. Relaxations  for debt restructuring in distressed  companies  from the applicability  of provisions  relating  to preferential  issues.
- viii. Provided  for single  registration for stock  brokerV clearing  members  for operatilg in all stock  exchanges/ clearing corporations.
- ix. The SEBI (lnternational  Financial Services  Centers)  Guidelines,20l5  were issued to provide for an enabling regulatory framework  for the registlation  and conduct  of securities market activities  in the International Financial  Services  Centre  (IFSC).
- x. The SEBI  (lnfi'astructure  Investment  Trusts) Regulations,  201 4 and SEBI  (Real  Estate  lnvestment  Trusts)

## GO\'ERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT  OF ECONOMIC  AIFAIRS FINANCIAL  MARKETS DIVISION

## LOK SABHA INSTARRED  QITESTION  NO. r78 TO BE ANSWERED ON TRIDAY, I5,h DECEMBER,2OITI  AGRAIIAYANA 24, 1939 (SAKA)

## REFORMS IN PRI}trdRY AND SECONDARY SECURITIES MARKET

## OUESTION

Regulations,  20 14 were issued for monetizing completed and revenue  generating infrastructure  assets and providing  investors an opportunity to invest in this asset  class.

- x1 The SEBI (Research Analysts)  Regulations, 2014 were notified to foster objectivity and transparency  in research and provide investors  with more reliable  and usefu! information  to make  informed  decisions.
- xlt SEBI prescribed  nonns for Core Settlement Guarantee  Fund (Core SGF), Default  Waterfall  and Stress Testing to bring greater clarity  and uniformity as well as align the same  with intemational  best practices  and to enable Clearing  Cprporations  to deal  with defaults  ofthe clearing  members effectively.
- xtll Enabled  a single  consolidated view of all the investments of an investor  in Mutual Funds (MF) and in securities held in demat form with the Depositories  vide the Consolidated  Account  Statement  (CAS).
- xtv, SEBI (Issue and Listing of debt Securities by Municipalities) Regulations,  2015 were notified to provide  a framework  goveming the issuance and listing ofbonds by Municipalities.
- xv Alternative Inveshlent  Funds (AIFs)  were allowed to invest  in equity and equity  linked instruments  only of oll--shore  venture capital  undellakirgs,  $hich  have an Indian connection,  subject to overall limit of USD 500 nr illiol.
- Provided the regulatory framework  for Cornmodiry Derivatives Brokers and integrated  broking activities  in equity markets and comrnodity derivatives  markets. x\'l
- Electronic book mechanism was introduced  for issuance  of debt securities  on private placement  basis and to enhance transparency in price discovery. \\rn
- SEBI issued guidelines  on 'Disclosure requirements for issuance and listing  of green  debt securities'. xvlll
- An online system of registration for Portfolio managers, AIFs, Foreign Venture  Capital Investors,  Venture Capital Funds,  Research  Analysts  and Investment  Advisers  was introduced. xix.

(b)  and  (c):  SEBI has informed  that it has not initiated  any reforms intending to push rules  for the merger of 6t October, 2017 and 46 December,  2017, it has p.orid"d mutual funds. However, vide Circulars dated guidelines  with respect to categorization and rationalization  of mutual  fund schernes,  the intended benefit  and impact of which is as follows:

- i.  To bring  uniformity il  the practice, across  Mutual funds,  which would enable the investors  to clearly identifo  tlre nature  of the scheme and compare  the scheme with its peers before  making investment.
2. iiRemove  duplicate  or similar  schemes and standardize  the scheme categories.
- iii. Create a level playing field in the rnutual  fund industry.

(d):  The details of insider  trading cases laken up and completed  by SEBI during the last three  financial years  are g1ven below:

| Financial Year   | Cases taken up   |   Cases completed |
|------------------|------------------|-------------------|
| 2014-15          | 10               |                15 |
| 2015- 16         | t2               |                20 |
| 2016-t7          | J4               |                15 |

(Source: SEBI)

Regulatory  intervention  has been made in the areas of market manipulation  and insider trading in the form of Regulations  such as SEBI (Prohibition of Insider Trading) Regulations,  1992 which was replaced by SEBI (Prohibition  of Insider Trading)  Regulations,  2015 and the SEBI (Prohibition  of Fraudulent  and  Unfair Trade Practices  relating to Securities  Markets) Regulations,  2003.  The Regulations  on Insider  Trading  and disclosure norms are reviewed as and when the need arises for the same. In this regard, SEBI has set up a Committee  on Fair Market  Conduct  consisting  of 15 members,  under the chairmanship  of Dr. T.K. Viswanathan, inter-alia, for identification of opportunities for improvement  in SEBI (Prohibition  of Insider Trading)  Regulations,.20l5  and SEBI (Prohibition  of Fraudulent and Unfair Trade Practices  relating to Securities Market)  Regulations,  2003. particularly with respect to trading  plans, handling of unpublished  price sensitive information during takeovers and aligning Insider Trading Regulations  with the provisions ofthe Companies  Acq 2013.