Execution only platform

The Execution-only service is a trading service that only allows the execution of trades, without providing advice to the client regarding the merits or risks of the investments or their suitability. This service is typically internet- or telephone-based, and is lower cost than more robust offerings. It is most suitable for experienced investors who are aware of the risks and rewards of various types of investments.

SEBI’s Changes to Buyback Regulations

  • The Securities and Exchange Board of India (SEBI) has recently made changes to regulations surrounding buybacks of shares. The existing mechanism for buyback through stock exchanges faced two major challenges: one shareholder’s entire trade could get matched with the purchase order placed by the company, and the six-month window provided to complete the buyback could create artificial demand and prevent efficient price discovery.
  • In response to these challenges, SEBI is phasing out the stock exchange mechanism of buybacks and introducing a separate window on stock exchanges for undertaking buyback. The period for the tendering of shares and payment of consideration to the shareholders has also been reduced. Additionally, SEBI has increased the minimum utilization of the amount earmarked for buyback from 50% to 75%.

SEBI’s Changes to Governance Standards for MIIs

  • SEBI has also made changes to governance standards for Market Infrastructure Institutions (MIIs) such as stock exchanges, clearing corporations, and depositories. In November 2022, a report of the Committee on Strengthening Governance of MIIs proposed a slew of changes to enhance governance standards. SEBI has approved certain recommendations to bring in greater transparency and accountability in the functioning of MIIs.
  • SEBI has divided the functions of MIIs across three verticals: critical operations, regulatory, compliance and risk management, and business development. Each core function of the MII should be headed by a designated key management person (KMP). SEBI has also approved revisions in the performance assessment requirements of MIIs and has stated that internal evaluation of the functioning of MIIs and their statutory committees will take place annually. External evaluation is to be done by an independent entity every three years.

Synopsis

SEBI’s recent changes to buyback regulations and governance standards for MIIs are aimed at increasing transparency and accountability in the securities market. The phasing out of the stock exchange mechanism of buybacks and the introduction of a separate window for buyback is intended to address the challenges faced by the previous mechanism, while the changes to governance standards for MIIs are aimed at strengthening the functioning of market infrastructure institutions. The new regulations aim to optimize the utilization of resources and classify functions, resulting in greater efficiency and transparency in the securities market. Overall, these changes are aimed at fostering a more robust and reliable securities market in India, providing greater protection for investors and encouraging greater participation in the market. The increased transparency and accountability in buyback regulations and governance standards for MIIs will also help deter malpractices and increase market confidence.

Written by IAS POINT

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