SEBI Mulls New Architecture For Implementing Rules

SEBI Chairperson Madhabi Puri Buch on Monday said the capital markets regulator is looking to introduce an entirely new architecture where the industry evolves ways to implement rules.

It also announced a review of the delisting process and promised to come out with a consultation paper by December, wherein the intent is to make it easier for companies to undertake such moves, Buch said.

On the new architecture for regulations, Buch said SEBI has frequently received feedback wherein participants find it difficult to implement the regulations that it has announced, which is leading it to experiment with this pilot project.

This will be like a regulatory sandbox, Buch said, maintaining that the system will be used for prospective regulations and can also be used for existing ones if the industry comes up with specific challenges.

She also made it clear that none of the regulations will be on hold.

"It is a mechanism to assist the industry to implement the regulations. It is not a route for deferment of regulations," she said.

In the case of mutual funds, where only 40 players exist, it is easier to establish such norms through their lobby grouping Amfi but the same is difficult for the wider universe of listed companies, Buch said.

SEBI has written to various bodies, including CII, Ficci, ICAI and ICSI, as well as the CEOs of Nifty 50 companies since Sunday with regard to the proposed regulatory sandbox.

Buch said the industry should craft their own standards and may share the same with Sebi before it is implemented.

To illustrate the concept, Buch used the case of rumour verification and pointed out that most of the listed players engage media monitoring agencies to track reports and the same can form the background for the industry norms which can be issued centrally.

SEBI does not want companies to spend hundreds of crore to comply with the norms on rumour verification, and would like them to spend a few thousand rupees on engaging with a media monitoring agency, she said.

However, the norms on how to hire the services and a list of agencies offering such services, among others, are the ones which need to be formulated. The same will be decided by the industry, she said.

About delisting norms, Buch said there are concerns that reverse book building process followed at present is being misused by certain operators who pick up over 10% stock of a company in concert and jack-up the prices which leads to the delistings getting more dear for companies.

A committee under former HDFC Vice Chairman Keki Mistry is looking into this issue and SEBI is also looking at the possibility of having a fixed price for delisting as well, Buch said.

SEBI is also reviewing insider trading norms following feedback of it being onerous received from certain quarters, Whole Time Member Ananth Narayan said.

A committee of market experts is looking into this aspect, and the markets regulator will come out with a consultative paper by August for public consultation, Narayan said.