Sebi gives more power to investors: An analysis

As CNBC-TV18 reported on June 16, the Sebi board has rationalised disclosure norms for rights issues, allowed investors to choose commission payable to mutual fund distributors, cut fees for financial intermediaries by 50%, and approved the concept of anchor investor. CNBC-TV18's Siddharth Zarabi and Priyal Guliani report.

Also see: SEBI's MF move to benefit retail investors: Religare MF

Here is a verbatim transcript of the exclusive interview with Siddharth Zarabi on CNBC-TV18. Also see the accompanying video.

We knew that there was going to be a big agenda for the board today. Several things have come through. On the market intermediary fee cut, this is clearly going to be an across the board cut for all market intermediaries including FIIs, sub-broker accounts, foreign venture capital funds, brokers, sub-brokers.

The first thing is that it is a broad 50% cut across the board. For instance, the FII registration fee has been cut by 50% to USD 5,000. Similarly, FII sub-account registration fee has been cut to USD 1,000. For all purchase and sale of securities, brokers will pay only Rs 10 per crore, while for debt securities it has been halved to Rs 2.5 per crore. The derivatives segment trading member fee will be halved to Rs 10 per crore.

All these fine details were not announced in the press conference. But what we understand is that Sebi would have approved of the entire agenda. We will have to wait for the fineprint in the Sebi press release to go into the fine points of some of these proposals that have not been explicitly announced.

 

Secondly, one key relaxation is in terms of the easier disclosure norms for rights issue. What does this really mean? Each time a listed company has to go in for a rights issue, there is an onerous and time consuming task of making a whole lot of disclosures.

Essentially, the entire disclosure process has been rationalised. Sebi had proposed to its board to drop things like the summary of industry and business, promise versus performance. It had said that management discussion and analysis should be retained but not the one that is post the last balance sheet. So, once the fineprint here is announced, a lot of companies, promoters, and investors will have clarity on this.

In terms of the primary market policy review, one of the key things is to ensure greater investor participation in the market. Any company that proposes to go and list will have to list on one nationwide stock exchange. From the proposal, it has specified stock exchange that has trading terminals spread all across the country. So, this is clearly a move aimed at ramping up the equity cult and ensuring greater participation.

On the crucial relaxation in terms of ADRs and GDRs, they will now be eligible for offer for sale. What have not come through in this press conference at this stage are several other things on the agenda, for instance the ICDR (Issue of Capital and Disclosure Requirements) regulation.

That apart, we have heard the Sebi Chairman talk about the mutual fund changes. CNBC-TV18 had reported this story several days back and of course this confirms that there are one or two other changes. Once we have experts and press releases coming in, we would be able to shed greater light on the exact impact.

The market intermediary fee cut is good news for the entire community that is involved in the stock market. This Sebi move will be welcomed as we go forward.