Sebi to mull options to change margin requirement in OFS

The Securities and Exchange Board of India (Sebi) board will meet on the 18th of january to review the rules governing offer for sale (OFS). This follows complaints from various FIIs, saying the mechanism carries forex risks, reports CNBC-TV18 quoting sources. The board has also complained that the current OFS mechanism has a higher margin requirement, despite being a secondary market transaction.

The Sebi board will study two options - a 100 percent upfront margin entailing bid modification and cancellation.

The second is making the margin requirement at par with the secondary market. However the second option will mean that bids cannot be cancelled, and can only be revised upwards in price and quantity.

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In addition, the board will also consider displaying the order book and indicative price throughout the trading session. The last move will ensure transparency, and prevent a flood of bids coming in only in the last hour of trade.

That's not the only thing on the Sebi board's agenda. It will be also apprised of the slew of penalties being planned against companies that fail to meet the 25 percent minimum shareholding limit by the June.Companies have been told that these penalties include the freezing of voting rights and corporate benefits, moving the scrip to the trade-to-trade segment, excluding the scrips from the F&O segment and banning promoters

In the capital markets, 178 non-PSU companies still have to meet this 25 percent float norm. As per Sebi's calculation on the December 31, over Rs 21,000 crore could be raised.