SEBI’s Recent Initiatives to Enhance Market Integrity and Investor Protection

  • Stock Market Analysis

In March 2024, the Securities and Exchange Board of India (SEBI) introduced several key policy measures aimed at bolstering trust in the securities market and safeguarding investor interests. Let's delve into the details of these significant developments.

Expanding Qualified Stock Brokers (QSBs) Framework for Enhanced Compliance

SEBI unveiled measures to broaden the framework of Qualified Stock Brokers (QSBs), aimed at fostering trust and ensuring investor protection. Previously, QSBs were assessed based on parameters such as total active clients, assets under management, trading volumes, and margin obligations. To further fortify compliance and monitoring, SEBI introduced three additional parameters: compliance score, grievance redressal score, and proprietary trading volumes. QSBs not meeting the updated criteria will need to adhere to enhanced responsibilities for an additional three financial years.

Amendment to Circular for Foreign Portfolio Investors (FPIs)

SEBI amended its circular concerning Foreign Portfolio Investors (FPIs) to mandate additional disclosures for those meeting specific criteria. However, FPIs with over 50% of their Indian equity assets under management (AUM) within a corporate group are now exempted from these additional disclosures under certain conditions. These conditions include the absence of an identified promoter in the apex company of the corporate group and the FPI's holdings in the group (excluding the apex company) not exceeding 50%. Additionally, collective holdings in the apex company by such FPIs must remain below 3% of its total equity share capital. Custodians and Depositories are tasked with monitoring this threshold, ensuring transparency in breaches.

Safeguards for Dematerialized Securities Transfer

SEBI introduced safeguards to address investor concerns regarding the transfer of securities in dematerialized mode. These measures, amending guidelines from October 2023, focus on preventing fraud and misuse of inoperative demat accounts. They include measures such as emphasizing investor education on preserving Delivery Instruction Slips (DIS), prohibiting pre-signed blank DIS, mandating immediate reporting of lost DIS, and implementing stringent verification processes for significant transactions. These initiatives aim to enhance investor protection and ensure the integrity of securities transactions.

Introduction of Beta Version of T+0 Rolling Settlement Cycle

In January 2023, Market Infrastructure Institutions (MIIs) implemented the T+1 settlement cycle. Acknowledging the benefits of a shortened settlement cycle, SEBI approved the development of a framework for the introduction of a Beta version of the T+0 settlement cycle alongside the existing T+1 cycle on an optional basis. This Beta version will be implemented in the equity cash market for a limited set of 25 scrips and a select number of brokers, aiming to further streamline settlement processes and enhance risk management.

SEBI's initiatives in March 2024 clearly underscore its commitment to reinforcing market integrity, fostering investor trust, and promoting efficient market operations. These measures mark significant steps towards creating a robust and investor-friendly regulatory framework in the Indian securities market landscape.

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  • Sajjad Bhatti @Sajjad Bhatti
    Like 0
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  • Bharath Kumar @Bharath Kumar
    technology has grown rapidly, these measures expected, even apps to suggest best stocks are there, so these measures are nothing we need all companies details in the stock market,more than 6000 listed companies
    Like 1

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