Sebi – TheNewsHub

HDB Financial Services files draft documents for Rs 12,500 crore IPO

suimt — Thu, 31 Oct 2024 13:03:34 +0000

NEW DELHI: HDB Financial Services, an HDFC Bank subsidiary, has submitted draft documentation to Sebi for raising Rs 12,500 crore through an IPO. The offering consists of Rs 2,500 crore in fresh equity shares and Rs 10,000 crore through an OFS by HDFC Bank, as detailed in the Draft Red Herring Prospectus (DRHP) submitted on Wednesday. Currently, HDFC Bank maintains a 94.36 percent ownership in this NBFC subsidiary.
The fresh issue proceeds will be used to enhance the company’s Tier-I capital base, supporting future capital requirements and business expansion through increased lending capabilities.
The listing initiative aligns with RBI’s October 2022 directive, which requires upper layer NBFCs to achieve stock exchange listing within a three-year timeframe.
HDFC Bank’s board gave approval for the Rs 12,500 crore share sale, including a Rs 10,000 crore OFS for HDB Financial Services, earlier this month.
Twelve book-running lead managers has been appointed to oversee HDB Financial Services’ IPO. This includes prominent financial institutions such as JM Financial, BNP Paribas, BofA Securities India, Goldman Sachs (India) Securities, HSBC Securities and Capital Markets (India) Pvt Ltd, IIFL Securities, Jefferies India, Morgan Stanley India Company, Motilal Oswal Investment Advisors, Nomura Financial Advisory and Securities (India) Pvt Ltd, Nuvama Wealth Management, and UBS Securities India.
Post-IPO, HDB Financial Services will remain under the bank’s control as a subsidiary, adhering to applicable regulatory requirements.
Incorporated in 2007, HDB Financial Services is a prominent player in India’s non-banking financial company (NBFC) sector providing services like lending and BPO services. It reported a net worth of approximately Rs 13,300 crore at the end of the June quarter.

Denied exemption, Sebi chief Madhabi Buch set to appear before PAC tomorrow

suimt — Tue, 22 Oct 2024 22:19:13 +0000

NEW DELHI: After much suspense, Sebi chairperson Madhabi Buch is scheduled to appear before the Public Accounts Committee of Parliament on Thursday, a meeting that on agenda is slated to be a performance review of the top regulator, but which may result in fireworks over its functioning as well as about the recent allegations of impropriety levelled against Buch.
Well-placed sources said Buch had sought an exemption from the PAC, but was denied. They said she should be present before the committee.
The agenda of the committee’s meeting is “briefing by audit followed by oral evidence of the representatives of ministry of finance and Sebi on the subject ‘performance review of regulatory bodies established by Act of Parliament’.”
When the summons were issued to Buch for appearance this month, BJP protested the decision of the PAC headed by Congress MP and AICC general secretary KC Venugopal, and attributed political motives to his move. BJP members had also written a letter to the Lok Sabha Speaker protesting the summons. However, the issue appears to have settled in favour of the PAC summons.
Sources said BJP has issued a whip to its members to attend the meeting, and protests against opposition members on their line of questioning may be in the offing. Though the said agenda is limited to the Sebi’s functioning, political leaders believe that the Sebi chief headed team may be subjected to questions about the regulator’s functioning, which gained prominence over the issue of industrialist Adani in the wake of the allegations levelled by US short-seller Hindenburg.
Also, specific questions could be asked to Buch about allegations of financial misconduct and of conflict of interest. While the charges against Buch were first levelled by Hindenburg, they were followed up by various whistleblowers, and by the opposition led by Congress, triggering a political storm. Buch and her husband have rebutted the allegations.

CCI to streamline penalty recovery mechanism to force reluctant defaulters

Aseem — Sun, 20 Oct 2024 12:33:54 +0000

New Delhi: Faced with a low recovery rate of penalties imposed for anti-competitive conduct, the Competition Commission of India (CCI) has started exploring ways of making recovery more effective.

The regulator has set up a three-member internal committee to recommend measures to make the recovery process more robust, two persons informed about the development said.

Committee to make suggestions on amendment

The committee will make suggestions to amend CCI’s set of regulations on recovery of monetary penalty, which were originally issued in 2011 and amended in 2014 and 2021, said the person, who spoke on the condition of not being named.

The move to streamline the penalty recovery proceedings comes at a time the Public Accounts Committee of Parliament is preparing for a performance audit of some of the regulators such as CCI, Sebi and TRAI and the Parliamentary Standing Committee on Finance is examining the funding and track record of CCI and the Serious Fraud Investigation Office.

Once the recommendations are ready, CCI is likely to hold public consultation before further modifying the regulations, a second person who is also aware of the development said.

CCI said in its annual report for FY23, that in FY22 and FY23, the regulator imposed penalties of ₹1,336 crore and ₹2,672 crore, but could recover only about 13% and less than 1% of those, respectively.

The panel’s recommendations are expected to help improve recovery. CCI has the power to recover penalties by attaching the movable or immovable property of the entity that defaults on making the payment as ordered.

But businesses tend to challenge it in the National Company Law Appellate Tribunal (NCLAT) or the Supreme Court.

Queries emailed to CCI on Friday seeking comments for the story remained unanswered at the time of publishing.

The effectiveness of CCI cannot be solely assessed by the collection of penalties, as the primary objective of it is to correct market behavior and to deter anti-competitive practices, said Sonam Chandwani, managing partner at law firm KS Legal & Associates.

“The inability to recover penalties arises from several challenges, including the absence of a dedicated recovery mechanism and a lack of dissuasive measures. Moreover, companies frequently appeal CCI orders, resulting in prolonged litigation and interim stays granted by appellate bodies, causing delays in penalty payments,” explained Sonam Chandwani, managing partner at law firm KS Legal & Associates.

“To tackle this, the CCI needs specialized units with robust enforcement mechanisms to ensure penalties are collected efficiently. Also, adopting stringent systems and offering flexible payment options could improve the timeliness of recovery and strengthen adherence to CCI’s directives,” said Chandwani.

The government last year introduced several changes to the competition law to make cartels come clean and to make businesses guilty of less serious anti-competitive conduct to opt for settlements as part of efforts to reduce litigation and to achieve quick closure of cases.

After this, CCI rolled out its ‘lesser penalty plus’ regulations in February this year expanding the scope of its scheme meant to encourage cartels to make disclosures and to cooperate with investigation.

Under the modified scheme, the second member of any cartel to blow whistle gets more reduction in penalty if it discloses existence of another cartel. It can also get even up to full waiver of penalty in the case of the second cartel, subject to riders. This expands on the scheme that had been in force allowing for upto 100% waiver for the first cartel member to blow whistle.

As per the regulations for settlement and commitment schemes rolled out in March this year, erring entities can either commit to address the regulator’s concerns around anti-competitive conduct before an investigation is completed or settle it by paying an amount decided by CCI after the investigation. The schemes are expected to help in closing cases quickly and offer certainty to businesses.

Sebi extends deadline for securities payout to client's demat account to November 11

suimt — Thu, 10 Oct 2024 17:38:43 +0000

MUMBAI: The Securities and Exchange Board of India (Sebi) on Thursday extended the deadline for the implementation of direct securities payouts to client’s demat account to November 11 to ensure smooth implementation, without any disruption to the market players and investors.
Sebi explained that the extension, initially set for October 14 is a response to feedback received from the Brokers’ Industry Standards Forum.
“Based on the review meeting held by SEBI with MIIs and based on representation received from Brokers’ ISF, it has been decided that the circularshall come into effect from November 11, 2024, in order to ensure smooth implementation of pay-out of securities directly to the client’s demat account, without any disruption to the markets players and investors.
The move came just a day after the National Stock Exchange Ltd (NSE) conveyed a go-live date for the direct payouts under the T+1 rolling settlement system.
Sebi’s new rules, set to be implemented in two phases starting October 14, 2024, was to enable the direct credit of securities to investors’ demat accounts after a trade, reducing the intermediary role of stockbrokers in the settlement process.
Under the current system, after investors purchase securities, the Clearing Corporation (CC) first credits these securities to the broker’s pool account. The broker then transfers the securities to the buyer’s demat account. The broker holds control of these securities until the final transfer is made to clients.
As per Sebi, the aim of the order is to protect the client’s securities, and enhance operational efficiency and risk reduction.
Securities are currently credited to the broker, who then transfers to the investor. The procedure will be more effective under the new regulations since securities will be directly credited to the investor’s demat account.
As per the new rules, the brokers will not handle pledges for securities that are underpaid or funded by margin under the new regulations. Rather, if a client fails to make a full payment for the securities, the broker will ask the CC to record the pledge in the client’s demat account. The pledge will be released after the securities are fully paid.
As per the rules, once the direct payout system is implemented, the settlement payout by exchanges and clearing corporations will happen by 3:30 pm. Earlier, the timing was 1.30 pm on the payout day, which is the next day post-trade.

NSE, ex-MD settle case with Sebi for Rs 643 crore

suimt — Fri, 04 Oct 2024 21:47:13 +0000

MUMBAI: NSE and nine of its former senior executives, including earlier MD Vikram Limaye, have settled a case with Sebi over allegations that brokers bypassed a trading access point to enable faster trades for Rs 643 crore. This is the largest settlement order in Sebi’s 36-year history. In addition to the settlement amount, eight officials have been asked to perform at least 14 days of pro bono community service.
Sebi has been investigating NSE’s trading access point (TAP) architecture and network connectivity for nearly a decade. The probe focused on whether trading members bypassed TAP, the handling of a 2013 complaint, and whether NSE’s lapses led to securities law violations. According to the order, NSE, on behalf of the applicants, remitted the settlement amount on Sept 25, 2024.
The former executives involved include NSE’s ex-chief technical officer Umesh Jain, GM Shenoy, chief information security officer Narayan Neelakantan, chief regulatory officer V R Narasimhan, head of regulatory affairs Kamala K, VP of the business solutions group Nilesh Tinaikar, former senior VP of operations Mayur Sindhwad, and former key employee R Nandakumar. Shenoy has been excluded from the community service order.

The key charge was that NSE failed to take adequate measures to prevent trading members from bypassing TAP. The complaint and TAP deficiencies were not reported to NSE’s Standing Committee on Technology, even after Sebi’s 2015 circular on cybersecurity. Additional allegations included delays in appointing a chief information security officer, failure to implement encryption in TAP, and the omission of the chief technology officer as key management personnel, potentially violating Sebi’s circular.
TAP was an IT system deployed by NSE on trading members’ servers to manage connections and trades. Despite the introduction of alternatives like ‘Trimmed TAP’ in 2013 and ‘Direct Connect’ in 2016, TAP remained in use until 2019 for equity and 2020 for securities lending and borrowing.

SEBI's New Measures Could Halve Trading Volumes In F&O Segment

suimt — Thu, 03 Oct 2024 07:47:00 +0000

New Delhi: Securities and Exchange Board of India’s (SEBI) new measures to curb derivatives trading could halve volumes in the futures and options (F&O) segment, according to a media report.

Media report citing sources said that volumes could drop by as much as 50 per cent after new measures take effect. They expect around 50 to 60 per cent of traders to exit the F&O segment due to higher contract sizes.

Sources further said, “If there is no change in the volume of the derivatives market after the implementation of the new rules, then SEBI can take further action.”

“Due to SEBI’s action, the average trade size of futures and options may increase to Rs 20,000 in FY 2025, which is currently Rs 5,500,” the report stated.

SEBI tightened the F&O segment rules on Tuesday.

Under the F&O measures, the market regulator has increased the minimum contract size in the index derivatives to Rs 15 lakh from the current Rs 5 lakh.

The market regulator has also reduced the weekly index expiry count to one per exchange. This means that exchanges can only offer one expiry in a week on one benchmark index. The market regulator has taken this step due to heavy losses incurred by retail investors in the F&O segment.

Recently a study was released by the market regulator. It was reported that in the last three years, 1.10 crore traders in the F&O segment have suffered a combined loss of Rs 1.81 lakh crore. Out of these, only seven per cent of traders have been successful in making a profit.

The new rules for derivatives contracts will come into effect from November 20.

To curb speculative trading, the government has also raised the securities transaction tax (STT) on the F&O segment from October 1.

Sebi's new F&O rules make entry tougher

suimt — Tue, 01 Oct 2024 22:38:52 +0000

MUMBAI: Sebi has made it tougher for individuals to participate in equity derivatives trading by raising the entry barrier in terms of contract size, and requiring upfront fees and costlier roll-overs.
Under the new regulations, option buyers must pay premiums upfront, replacing the practice where brokers were allowed to provide collateral. Sebi has also done away with the special pricing on expiring contracts that enabled traders to take larger positions.Both practices, which allowed investors to sell an expiring option and buy a longer-term one with lower margins, will take effect from Feb 1, 2025.
Noting that the current stipulation that index derivatives must have a contract value between Rs 5-10 lakh was set in 2015, Sebi said that derivatives contracts henceforth shall have a value between Rs 15 lakh to Rs 20 lakh. The lot size will also be adjusted so that the contract value stays within the new bracket during reviews.

Sebi will monitor position limits throughout the day instead of only at the end to control the high trading activity, especially on expiry days. Exchanges will limit weekly expiries to one index per week, simplifying the current practice of multiple expiries.
Speaking to TOI, Dhirendra Kumar, CEO of Value Research, said, “Unlike equity, which by definition has to generate a better return than fixed income over time, derivatives are a zero-sum game, and it is almost always the individual investor who loses. Sebi should introduce a statutory warning illustrating the risk of losses, just like with cigarettes.” He added that while in equity, the risks are of price volatility and the failure of individual companies – which can be addressed by long-term investing and diversification – derivatives are an unnecessary risk for individuals. “Brokerages pretend to make money by selling stocks, but their business model is such that revenue comes from F&O, and they would have to shut shop if investors only bought and held shares,” he noted.
Recently, a Sebi study found that 93% of over 1 crore individual F&O traders incurred average losses of around Rs 2 lakh each between FY22-24, totalling over Rs 1.8 lakh crore. The share has gone up from 89% in FY22.