Business & Economy Current Affairs 2017

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Verizon Completes Yahoo Acquisition

Telecom giant Verizon has acquired Yahoo’s core business for $4.48bn (£3.51m), thus ending Yahoo’s two-decade long run as an independent company. Verizon is the No.1 wireless operator in the US.

Salient Highlights

Verizon will combine Yahoo with AOL which was bought by it two years ago to establish a venture called Oath. The Oath is a division in Verizon’s Media and Telematics organisation. Oath owns more than 50 brands such as HuffPost, TechCrunch and Tumblr.

With the acquisition, Yahoo’s chief executive Marissa Mayer has resigned.

Verizon has not indicated how it proposes to use the Yahoo brand which is used by millions of people worldwide. But it has stated that it will keep the names Yahoo Sports, Yahoo Finance, Yahoo Mail and more.

Yahoo’s acquisition brings to an end a long decline of its market value which peaked at $125 billion in 2000.

The remainder of Yahoo which is not acquired by Verizon will change its name to Altaba Inc. It will become a holding company with 15.5% stakes in Chinese Internet giant Alibaba and a 35.5% holding in Yahoo Japan Corp. It will begin trading under the ticker symbol “AABA.”

Thomas McInerney, a Yahoo board member will be made as Altaba’s chief executive officer.

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SEBI allows Options Trading in Commodity Futures

SEBI has allowed options trading on futures contract of commodities. However, the capital market regulator has allowed the commodity derivatives exchanges to initially launch options on futures of only one commodity.

Salient Highlights

SEBI has put in place strict eligibility criteria for the commodity exchanges to start trading in options contract of commodities.

SEBI will allow options trading on futures contract of only those commodities that are among the top five in terms of the total trading turnover value of previous 12 months. Further, the average daily turnover of underlying futures contract of such commodities in the previous 12 months should be minimum Rs200 crore for agricultural and agri-processed commodities, and Rs1,000 crore for other commodities.

SEBI has asked the commodity exchanges to follow robust risk management measures. It has also come up with necessary guidelines with respect to the product design that need to be adopted for trading in options on commodity futures.

SEBI has mandated the commodity derivatives exchanges which are willing to commence trading in options contracts to seek its prior approval.

Background

Commodity Exchanges have been requesting SEBI for a long time to permit options trading in commodities be allowed. Last year, SEBI had agreed to permit options trading but some legal requirements remained unfulfilled.

Options Contract: It is a derivative product that offers an investor the right to purchase without any obligation to buy at the specified price/date.

Futures Contract: It is a contract between two parties where both parties agree to purchase or sell a particular commodity or any other financial instrument at a predetermined price at a specified time in the future.

SEBI

SEBI is the statutory regulator for the securities market in India established in 1988. It was given statutory powers through the SEBI Act, 1992. SEBI’s headquarters is in Mumbai, Maharashtra. SEBI’s mandate is to protect the interests of investors in securities, promote the development of securities market and to regulate the securities market. The Key function of SEBI is to regulate stock exchanges and other securities markets.

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SEBI asks Commodity Exchanges to Set up Investor service Fund

SEBI has come up with comprehensive guidelines asking the Commodity derivatives exchanges to compulsorily set up investor protection and service funds.

Salient Highlights

The commodity exchanges should maintain separate bank accounts for maintaining the corpus of the IPF and the ISF.

ISF 

The Investor Service Fund (ISF) is aimed at providing minimum facilities at various investor service centres.

At the initial stage, the commodity exchange has to contribute at least Rs 10 lakh towards ISF. Subsequently, the commodity exchanges are required to transfer 1% of the turnover fees charged from its members on monthly basis towards the ISF.

IPF 

The Investor Protection Fund (IPF) of a Commodity Exchange should have a maximum of five trustees. Out of these, three trustees should be public interest directors and a representative from Sebi-recognised investor association. In addition, the commodity exchange’s compliance officer should be made part of the trust.

The IPF will comprise of all penalties levied and collected by the commodity exchanges except for the settlement related penalties.

The exchanges will have the freedom to fix suitable compensation limits in consultation with the IPF trust.

The exchanges can make use of the IPF corpus for investor education and other awareness programmes.

The trust will be responsible for the supervision of utilisation of interest on IPF.

SEBI

SEBI is the statutory regulator for the securities market in India established in 1988. It was given statutory powers through the SEBI Act, 1992. SEBI’s headquarters is in Mumbai, Maharashtra. SEBI’s mandate is to protect the interests of investors in securities, promote the development of securities market and to regulate the securities market.

The Key functions of SEBI are as follows: Regulating stock exchanges and other securities markets; Registering and regulating the working of intermediaries who are associated with securities markets in any manner; Registering and regulating the working of venture capital funds and collective investment schemes including mutual funds; promoting and regulating self-regulatory organizations and prohibiting fraudulent and unfair trade practices relating to securities markets.

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