SEBI Current Affairs - 2019

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SEBI sets norms to govern international financial centres

The Securities and Exchange Board of India (SEBI) approved guidelines to govern international financial services centres (IFSC). These guidelines were approved by SEBI board meeting on 22 March 2015.

The news guidelines relax the norms for Stock exchanges and clearing corporations to set up IFSC. It also relaxes norms and allows existing exchanges to set up their subsidiaries in the IFSC

Key facts

  • Stock exchanges will be set up with Rs. 25 crore capital. This capital is against the previous normal requirement of 100 crore rupees.
  • However, this initial capital should be raised to 100 crore rupees within next 3 years. Such exchanges will also be given 3 years to complete de-mutualisation.
  • The initial capital requirement will be 50 crore rupees for a clearing corporation, against the previous norm of Rs. 300 crore. But it will have to be achieved within 3 years period.
  • IFSC will be established under the Special Economic Zone (SEZ) Act of 2005 and the issue of depository receipts and other securities by foreign issuers under the Foreign Currency Depository Receipts Scheme, 2014, will also be allowed.

Background

During the budget speech of 2015-16, Union Finance Minister Arun Jaitley had announced relaxed guidelines in order to pave way for establishing Gujarat International Finance Tec-city (GIFT), the first IFSC in Ahmadabad.

Month: Categories: Business, Economy & Banking

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SEBI approved new Insider trading rules

The Securities and Exchange Board of India (SEBI) has revamped the rules related to the Insider trading for the protection of the smaller investors. Insider trading refers to the trade of a company’s stocks or other securities and making unethical profits with access to the non-public information. This is detrimental to the other / small investors who don’t have such information.

The new rules align the insider trading rules to current international practices. The key changes are as follows:

  • The biggest problem under the current rules is that the burden of proof (whether a person indulged into insider trading) was on SEBI. It was very difficult to prove that someone was insider. In the new rules, the burden of proof is on the accused and not the regulator.
  • In the new rules, the definition of the term “insider” has been broadened. The new rules say that anyone who is in contractual, fiduciary or employment relations with the promoters will be presumed to be ‘insiders’. Thus, the new rules include the immediate relatives of promotes, directors and employees who are in possession or have access to such information, within the scope of insiders.
  • The new rules make it mandatory that the perpetual insiders such as promoters and directors will have to disclose their future trading plan in advance to the stock exchanges. They are required to trade strictly as per that plan.
  • The definition of the “price sensitive information” has been broadened. Earlier, it has reference to only to company but now, it will have reference to company as well as securities.

The menace of Insider trading is not among the small firms but in big companies as well. It is a known fact that most of the profits are earned by the promoters and for SEBI it was very difficult to prove if someone was really an insider. The new rules give more teeth to SEBI to crack down on insider trading.

Month: Categories: Business, Economy & Banking

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