Sebi chief Tyagi takes inclusive path for market reform

The new Sebi chief Ajay Tyagi has decided to follow an "all-inclusive path" by personally meeting stakeholders from across the spectrum as the capital markets regulator gears up to usher in key reforms in areas like IPOs, foreign investors, commodities, mutual funds and investor protection.

Ahead of his first board meeting as Sebi Chairman next week, Tyagi has already met several groups of market participants and industry leaders, including foreign portfolio investors, brokerages, investment bankers and mutual funds.

Tyagi, who took over as Chairman of the Securities and Exchange Board of India (Sebi) last month, would be meeting more groups of representatives from various sectors including mutual fund CEOs in the coming days before the scheduled board meeting on April 26, where a number of reform measures are expected to be discussed, a senior official said.

The regulator will also look at steps to make the registration process easier for foreign investors, while some further steps could be considered to check any misuse of P- Notes or Participatory Notes.

Besides, a status update would be discussed in cases being looked into by the regulator where there could have been some misuse of the P-Note route, including by way of their issuance in the past to Indians or NRIs, which the rules now do not allow.

While Sebi already follows a participatory model in framing of its regulations, under which it puts draft of all proposed norms in public domain and decides final norms after taking into consideration inputs from all stakeholders, the new Chairman has decided to meet all concerned stakeholders directly to get "a first-hand understanding and follow an all-inclusive path to reforms", the official added.

Tyagi's predecessor U K Sinha had also followed a similar practice of meeting industry representatives on a regular basis and framing necessary regulations after taking into account their feedback.

The key reforms likely to be discussed by the Sebi board include permitting institutional investors in commodity derivatives in a phased manner, introduction of options trading in this market and tightening of norms to check any diversion of IPO funds.

Besides, issues like possible steps to attract startups to get listed and widening distribution network for mutual funds including by allowing sale through e-commerce and e- wallet platforms would also be discussed, the official said, while adding that the board will also take stock of ongoing probes in cases like NSE co-location issue and the NSEL scam.

The Sebi board will also discuss ways to conclude enforcement action in long-pending matters, some of which involve large corporate houses, while a status report is likely to be presented on all high-profile cases including those that have come to light in recent months and those concerning corporate governance issues.

Also on the agenda would be compliance by listed PSUs to the requirement for minimum 25 per cent public shareholding and whether they need to be given some more time.

Besides, some companies are yet to appoint at least one woman director on their respective boards. The Sebi board itself has now got a full-time woman member with eminent banker Madhabi Puri Buch having taken charge as a Whole Time Member.

According to sources, the regulator is also mulling whether there is need for expanding the board in view of the commodities market regulation coming under its fold.

A key agenda item for the board meeting would be making it mandatory for all companies to appoint a monitoring agency for usage of funds raised through IPOs or rights issue -- a requirement currently limited to only public offers worth over Rs 500 crore.

Besides, non-banking financial institutions may get some relaxations for investing in the IPOs, while unified license for brokers and new regulations on mutual fund redemptions are also likely.