Sebi proposes provisions for summary proceedings in norms for intermediaries, invites public comments

The Securities and Exchange Board of India (SEBI) on Tuesday launched a consultation paper on certain legal provisions proposed for summary proceedings to handle instances of security law violations by brokers as well as other intermediaries such as depository participants and research analysts. Inviting public comments till August 6, the capital market regulator stated that the proposed provisions of the summary proceedings would enable authorities to settle such disputes without long proceedings. Until now, matters related to only brokers were resolved through summary proceedings.   

The proposed legal changes will lead to "a faster and more efficient" handling of such matters, and hence enhance its board's ability to act swiftly in protecting investors' interests while maintaining the "integrity, transparency and efficiency of the securities market".

"There are certain cases of violations wherein it has been observed that the violations are obvious in nature or are either accepted by the Intermediary or need minimal documents or evidence to corroborate the facts... One such violation is (the) payment of fees by intermediaries to keep their registration in force. With the advent of the permanent registration being granted, intermediaries are required to only pay the fees at certain interval to keep their registration in force," Sebi said.

There have been an "increased number of instances wherein intermediaries have not paid fees to keep their registration in force and hence their registration as an intermediary has expired".

Since only valid certificates of registration should exist, the expired certificates of registration need to be cancelled, it said, adding: "Cancellation of the certificate of registration shall entail the current procedure under Chapter V of the Intermediaries Regulations which is long-drawn, even though it is clear that there is no dispute about violation."

Sebi also mentioned the presence of a few intermediaries that repetitively fail to submit periodic reports within the timeline specified by it.