SEBI has proposed to simplify many rules related to stock exchanges. These include a proposal to set a deadline for filing claims in case brokers default. The regulator wants to tighten the rules exclusively for promoters of listed companies. The regulator has also proposed merger of the investor protection funds (IPF) of the equity and derivatives segments of the exchange. However, most of SEBI’s proposals focus on the ease of doing business of the exchanges.
Proposal to introduce IPF claim lookback period
SEBI has proposed to introduce an IPF claim lookback period of three years. Under this, only transactions made three years before the member is declared a defaulter will be eligible for IPF claim. This will reduce old and repeated claim cases. The regulator’s proposal states that there will be amendments in the rules of MSECC. With this, only those claims will be considered eligible in which the underlying transactions fall within the scope of three years before the default is declared.
Plan to merge equity and commodity IPF
The regulator has also proposed merger of equity and commodity IPFs. SEBI has said that exchanges will maintain a single IPF, under which both equity and commodity segments will come. This will ease contributions, utilization, deployment and governance. Also the needs of the commodity segment can be met. SEBI believes that having a single IPF will make it easier to meet the needs of the exchanges. However, this merger will mainly be based on maintaining equivalent funds of commodity-derivative exchanges.
Restrictions related to IPF interest usage will be removed
A proposal has also been made to remove a specific restriction on NSE’s IPF interest usage. SEBI wants to bring uniformity among the exchanges in the matter of IPF. For this, there is a plan to remove the restriction under which NSE has to use the entire IPF interest of investors’ claims alone. This ban was implemented in 2020. There is a plan to change this after the representation received from NSE.
Rules will be strict for promoters of exclusively listed companies
The market regulator has also presented an important proposal for companies listed exclusively on the Dissemination Board (DB). Such companies will have to submit an action plan to the designated exchange within three months of going into DB. SEBI believes that the existing rules do not say anything about the timeline for submission of action plan. This gives unnecessary latitude to ELCs, creating uncertainty for shareholders. Therefore, a proposal for a three-month submission timeline has been proposed.