SEBI to focus on surveillance, primary markets and MFs as it outlines 2018-19 plan

The Securities and Exchange Board of India (SEBI) has outlined major policies that it wants to implement in 2018-19 to enhance the overall functioning of markets and companies.

The regulator is planning to implement these policies on the primary market, commodities segment, and mutual fund sector. SEBI has apprised its board of the changes it wants to bring in.

It wants to enhance surveillance on the equities market to safeguard investors, for which it will use analytical and statistical tools for better scrutiny.

A source close to the development told Moneycontrol, “For effective integrated surveillance, SEBI wants to use new technologies like blockchain and artificial intelligence. Machine learning will be deployed to handle challenges arising out of technological advancement in the market.”

For improve surveillance on markets and companies, the regulator is planning to strengthen rules and regulations on insider trading. The regulator wishes to reduce uncertainty in the market and dis-incentivise misuse of price-sensitive information being shared by insiders of listed companies.

It is also planning to formalise an arrangement or memorandum of understanding (MOU) with enforcement agencies to make it easier to share critical information between regulators and enforcement agencies.

Apart from this, client activity will be monitored by registered intermediaries.

Another source close to development said, “As of now there is no legal binding to carry out compulsory surveillance of client trading activity. Hence, the regulator wants to introduce legal provisions that mandate to carry out such surveillance. In case suspicious trade activities are detected, the intermediaries will immediately highlight the same to exchanges or regulators.”

Faster listing of public issues

SEBI wants to reduce the listing time of public issues for primary markets. The same has been suggested by SEBI chairman Ajay Tyagi on numerous occasions in the past.

“On an immediate basis, the listing time can be reduced from 6 to 4 days,” said a source with knowledge of the developments and added, “SEBI is planning to implement this policy in “the next three months to for improve efficiency.”

For secondary markets, the regulator is planning to implement a framework for interoperability between clearing corporations.

“This measure will be implemented in the next 2-3 months as SEBI wants to avoid NSE technology glitches and episodes of shut down where investors are not able to trade,” the source pointed out.

Further, more products are likely to be allowed in the market as options for investors. “This move will be initiated as SEBI is not happy with the volume of gold options. The regulator does not want to restrict products for improvement of market,” the source added.

As of now, the regulator is planning to review the norms surrounding stress testing, risk management and settlement guarantee funds.

Integration of commodities spot and derivatives market will take place in a phased manner, the source explained and said that a report regarding this has been submitted to the think tank NITI Aayog.

On mutual funds, SEBI wants to improve governance and enhance risk management. “SEBI is looking to bring uniformity in various practice including risk management, due-diligence process and channel of distributions,” the source stressed.