The Securities and Exchange Board of India, which met on Saturday, took some major decisions amid the resignation of wholetime member TC Nair.
The market regulator decided to set up an investor protection fund. It also approved delisting guidelines, regulation of investment advisors and the consent order scheme.
According to a source, around 20 decisions were taken. When the Board discussed issues related to corporate bonds, Nair had differences of opinion with the ministry representative and orally said he was resigning. No further details were available about his resignation.
The investor protection fund will be started with an initial contribution of Rs 10 crore (Rs 100 million) by Sebi. The Sebi also plans starting a nation-wide investors' education campaign.
The Board decided not to wait for an amendment to the Securities Contracts Regulation Act for the investor protection fund.
The Board also cleared the delisting guidelines with some modifications in its draft. The new guidelines will provide fair opportunities to companies opting for a delisting option even as they take care of investor interests.
The market regulator also approved the consent order scheme. The scheme provides for settlement of cases of violations by paying a penalty. The scheme will result in swift solutions to many cases of violations that have piled up.
The Sebi has also decided to frame regulations for investment advisors. The registration of advisors and the implementation of the norms will be the responsibility of a self-regulatory organisation, which is yet to be formed.
This will be the first instance of an SRO being appointed for any market intermediary. Earlier, brokers had proposed that their association was prepared to take up the responsibilities of an SRO.
The Association of Mutual Funds of India is also studying the possibility of becoming an SRO for mutual funds.
The Sebi has decided that the SRO will regulate those investment advisers, who provide advisory services related to securities under the Sebi regulations.
The financial standards planning Board has also shown interest in becoming an SRO for investment advisers.
Sebi has not taken any final decision on who will be acting as an SRO.
For advisory services other than securities, such as those related to commodity markets, the matter will be forwarded to the regulators concerned and a decision will be taken in coordination with the respective regulators.
The Board also discussed the issue of exchangeable bonds. In the previous Board meeting, short-selling of securities was also cleared.
Now, the Sebi is waiting for clarification from the CBDT as lending and borrowing of securities will not be treated as their sale and purchase.The RBI will also have to clarify on the Fema-related issues.
