The board of the Securities and Exchange Board of India (SEBI), which is scheduled to meet next week, will give final shape to the regulations governing investments by foreign investors especially those managed by Non-Resident Indians (NRIs).
The board will also give the final go-ahead to the new consent regulations that allow the regulator to settle cases related to serious market violations by intermediaries while accepting the report by the Committee on Fair Market Conduct, which, among other things, recommended giving SEBI direct powers to intercept phone calls for better investigation.
According to a person familiar with the development, the board will take a final decision on FPI Regulations based on the public feedback it receives on the recommendations made by the H.R. Khan Committee.
Public feedback
While the committee report was made public on Saturday, SEBI has given time till September 17 to submit public comments on the panel recommendations.
The SEBI board is scheduled to meet in Mumbai on September 18.
The FPI norms have been in the news in the recent past with overseas investors objecting to a circular issued in April that barred NRIs, along with Overseas Citizen of India (OCI) and Resident Indians (RIs) from managing the investments of SEBI-registered FPIs.
Though the panel report has recommended dilution of the contentious circular, the board will have to take a final call on the recommendations to effect any change in the earlier diktat.
Meanwhile, the board will also take up the report by former Supreme Court judge A.R. Dave on the consent mechanism. The panel has recommended allowing all serious violations of securities laws — including insider trading and front running — to be settled through consent though it has kept wilful defaulters out of its purview.
Interestingly, while the initial regulations on consent allowed insider trading cases also to be settled through consent, a review in 2013 barred violations related to insider trading and front running from being settled through consent, which typically involves paying a monetary penalty.
“Violations wherein a large number of investors are affected or if the integrity of the market has been hit can be brought under the purview of consent though the classification needs to be laid down clearly so that there is no ambiguity,” said a person familiar with the development.
The capital market regulator also plans to approve some of the recommendations of the Committee on Fair Market Conduct, which was formed under the chairmanship of former law secretary T.K. Viswanathan.
While currently, SEBI has powers to seek call data records as part of its probes, the committee recommended giving SEBI powers to directly intercepting phone calls. The government, however, will have the final say on this matter as any such power can be granted only by making necessary changes in central laws.
