InvestorQ : What were some of the key announcements made after the SEBI board meet in late September?
vaishnavi mhatre made post

What were some of the key announcements made after the SEBI board meet in late September?

vidhya Laxmi answered.
2 months ago

The late September meeting of SEBI had some key items on the discussion agenda. That included the issue of IPO price and valuation monitoring as well as the subject of insider trading in mutual fund units by the fund managers. Here is a quick gist of the meet.

1) At various fora, SEBI chairperson Madhabi Puri Buch had committed to bringing about better disclosure for IPOs especially to help a decision on digital and new age IPOs. The SEBI meet has made it mandatory for IPO issuers to disclose key performance indicators (KPIs) for an intelligent view by investors. In addition, the company must also disclose the price at which placements were done in the last 18 months or 36 months as the case may be. Also, IPO prospectus must disclose the ratio of IPO price to weighted average cost of acquisition (WACA). IPO pricing must be certified by an expert committee.

2) Going ahead, SEBI wants credit rating agencies (CRAs) to monitor use of issue proceeds even in QIPs (qualified institutional placements) and other private placements where issue size exceeds Rs100 crore. Currently, this is mandatory only for public issues and rights issues, but with the rising instances of private placements in the last few years, SEBI wants that review to be extended to placements also.

3) The Templeton fiasco was the turning point for mutual fund regulation. In that light, the SEBI approved inclusion of mutual fund units under SEBI provisions for insider trading. IN case, it is found that KMPs at mutual funds used inside information to take an exit from the funds (as in Templeton case), it can be a case of insider trading. This monitoring will be over and above the monitoring of stock positions that is already happening. It could be a disincentive for fund managers, but will make the markets certainly safer.

4) There could be some relief for F&O traders and cash market traders going ahead. SEBI has decided to make the net settlement of cash and F&O more inclusive. One exception to this net settlement system has been upon expiry of F&O positions where netting is not permitted. Now, SEBI will allow net settlement of cash and F&O segment even upon expiry of stock derivatives. This is likely to help to better align spot and F&O segments and also reduces the additional margin pressures on traders post expiry of F&O.

5) Finally, in the case of PSU OFS (offer for sale), SEBI has decided to do away with the 60 days VWAMP (value weighted average market price) consideration for pricing of OFS. This is more so when there is likely to be change in control from the government to a private party. This could aid strategic divestments by the government.