Regulatory Updates #31: All about SEBI

Bar & Bench will bring you the latest regulatory and policy updates from different ministries and regulatory authorities. In the this edition of the Bar & Bench Regulatory Updates, we analyse the latest circulars by the Securities and Exchange Board of India (SEBI)..SEBI allows commexes to modify futures contracts specifications.In order to ensure that ‘Exchanges are enabled to respond to the market requirements quickly’, SEBI has allowed commodity derivatives exchanges to modify future contract specifications related to Ticker symbol, Basis, Maximum order size, Trading unit, Delivery unit, Quotation base value, Tick size, Delivery centers, additional delivery centers, issue related to Premium/Discount, Quality parameters and its relevant aspects such as Quantity variation and Tolerance limit in the futures contract specifications..Thus far, exchanges were required to obtain permission from SEBI before making such modifications. The exchanges now are only required to inform the market participants and SEBI prior to making such modifications..SEBI has also allowed continuous trading in futures contracts of several commodities, subject to the bye-laws of the concerned exchange..SEBI eases documentary requirement for transfer of securities.SEBI recently issued a circular which aims at making transmission of securities more efficient and investor friendly. This is in continuation of its previous circular in 2013 which allowed conversion of physical securities into demat form..Transmission refers to the transfer of securities from the account of a deceased holder to that of surviving joint holder, nominee or legal heir..For securities held in single name without a nominee, an affidavit from all the legal heirs made on non-judicial stamp paper and claim of legal ownership to the securities might be sought..For value of securities up to Rs 2 lakh, succession certificate or probate of will or letter of administration or court decree might be required..In absence of these documents, a No objection certificate from all legal heirs of the deceased holder or copy of Family Settlement Deed duly notarised would be sought..UCC, PAN mandatory for transaction on commodity bourses.SEBI has made it mandatory for commodity derivate exchanges to use Unique Client Code (UCC) and Permanent Account Number (PAN) for all the persons transacting on the commodity derivate exchanges..Investors residing in Sikkim, however, have been exempted from the mandatory requirement of PAN. In that regard, exchanges should ensure a system of proper verification to verify that such investors are residents of Sikkim..The members required to collect data pertaining to their clients, which shall be furnished to the commodity exchanges and updated on a monthly basis..A penalty at the rate of 1% of the value of every trade will be imposed on the member for carrying out a trade without uploading the UCC details of the clients. The penalty collected by the exchanges would be transferred to the Investor protection Fund..Mutual Funds to disclose agent’s commission.SEBI had, earlier in March 2016, made it mandatory for Mutual Funds (MF) to disclose in the Consolidated Account Statement (CAS) the amount of actual commission paid by MFs to distributors..From October 1, MF investors can expect more detailed disclosures on the amount of commission their distributors are paid. The disclosure will now have to mention that the commission so disclosed is gross commission and does not exclude costs incurred by such distributers such as service tax, operation expenses etc..The circular further provides for an indicative format for preparing of the half yearly CAS, making some additions to the existing disclosures.