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Last Updated : Mar 25, 2020 01:48 PM IST | Source:

Coronavirus forces SEBI to reduce compliance burden on market participants

SEBI is closely monitoring the movements in the domestic market and has been taking appropriate measures from time to time.

Over the last few weeks, Indian equities have been broadly moving in tandem with the other global markets due to COVID-19 concerns and the fear of a resultant global economic slowdown. To ease some pressure, market regulator SEBI on March 23 has announced measures to reduce the compliance burden on various market participants.

The capital market regulator said the penal provision for non-collection/short collection of margins by brokers has been deferred till April 30, 2020.

These penal provisions were to be implemented from April 1, 2020.


But, reporting of non-collection/short collection of margins in the cash and derivatives segment will be continued to be done by the brokers, it said.

SEBI further said the delay in the submission of various reports by trading members would not attract penal provisions till April 30, 2020.

Trading members will be placed in risk reduction mode upon utilization of 90 percent (instead of the existing level of 85 percent) of the members' capital towards margins, it added.

Since the outbreak of COVID-19 has affected countries/jurisdictions across the world, global bodies like the International Organization of Securities Commissions (IOSCO) and Financial Stability Board (FSB) are coordinating closely with the regulatory bodies world over for sharing information on policies and regulatory actions being taken. SEBI is actively engaged with IOSCO and FSB at the global level.

The market regulator said NISM certifications which are expiring during the period, March 15 to June 29, 2020, have been extended till June 30, 2020.

"Trading members working from designated alternate locations are exempted from the penal provisions for not maintaining call recordings of orders/instructions received from clients till March 31, 2020. However, the trading member and the Stock Exchange shall send a confirmation on the registered mobile number of the client immediately after execution of the order," it added.

SEBI is closely monitoring the movements in the domestic market and has been taking appropriate measures from time to time.

The regulator has extended the implementation of its circular dated September 20, 2019, by one month (up to May 1, 2020) for risk management framework for liquid schemes of mutual funds.

It has also extended the implementation of circulars by one month (up to May 1, 2020) for existing open-ended debt oriented mutual fund schemes to comply with the revised limits for sector exposure, and for valuation of money market and debt securities based on mark to market valuation.

Further, the timeline to hold not in excess of 15% in unlisted NCDs has been extended till April 30, 2020, SEBI said.

SEBI allowed the half-yearly disclosures of unaudited financial results up to May 31, 2020.

The regulator extended the disclosure of commission paid to distributors and the yearly disclosure of investor complaints with respect to Mutual Funds by one month up to May 10 and June 30, 2020, respectively.

The validity of SEBI observation letter for New Fund Offer by Mutual Funds has been extended by 6 months, SEBI said. Thereby, Mutual Funds can launch schemes within a period of one year from the date of the SEBI letter.

The government has requested the state governments/union territories to keep the services of stock market entities exempted from the purview of lock-down and to permit the essential staff of the stock market participant to commute so as to ensure that the SEBI regulated stock market entities function smoothly.

"In these adverse times it is very appreciable that our regulator SEBI has allowed extension in timelines for certain disclosures and implementation of certain policy initiatives pertaining to mutual funds. The equity and fixed income markets are themselves in a volatile and correction phase in line with the global scenario. Regulator & Finance Ministry are taking enough steps which are definitely positive for the Indian Financial Markets to address the current situation," Kanwar Vivek -  Chief Executive Officer at Yes AMC told Moneycontrol.

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First Published on Mar 23, 2020 10:57 pm
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