Sebi to Investigate Stockbrokers' Concerns Over RBI's New Funding Regulations

Sebi to Review RBI's New Capital Market Exposure Rules

The Securities and Exchange Board of India (Sebi) will examine representations from stockbrokers seeking a reconsideration of new guidelines issued by the Reserve Bank of India (RBI). The RBI's norms, set to take effect from 1 April, require banks to tighten funding to proprietary traders. Sebi Chief Tuhin Kanta Pandey stated that the regulator will assess the matter, given the RBI's initial draft guidelines and consultation with stakeholders.

The Association of NSE Members of India (ANMI) had approached Sebi, expressing concerns over the RBI's proposal to increase bank guarantee collateral requirements to 100% from the current 50%. This potential tightening has raised concerns among stockbrokers, who are seeking a deferment of the new framework.

Trouble within Sebi

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Sebi's General Manager was suspended for a "sensitive vigilance matter" within the regulator's corporate finance department (CFD). Sebi Chief Pandey stated that the evidence was egregious enough to warrant action, emphasizing the importance of addressing any misconduct within the regulator.

Portfolio Management Services (PMS) Review

Sebi will conduct a comprehensive review of the PMS regulations 2020, following a similar review for mutual funds and stockbrokers last year. The review aims to ensure the framework remains effective, adaptable, and aligned with evolving market dynamics. Sebi Chief Pandey expects the review to be completed by June, with a consultation paper to be issued before the regulator's board meeting.

Oversight for Unlisted Sector

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Sebi plans to introduce oversight for the unlisted sector, specifically targeting companies preparing for an initial public offering (IPO). The regulator will focus on companies entering the "to-be-listed" space via exchange mechanisms, with formal operational guidelines and consultation papers to follow.