SEBI Current Affairs: August, 2018 (Part – II)

Relevant for SEBI Grade A 2018 Examination

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 Large Corporates split CMD’s post in light of SEBI Directive

• Large corporates have started

making arrangements to comply
with regulator Sebi's directive

• to split the roles of chairman and

managing director by April 1,
2020,
• but several smaller companies are
still giving their CMDs tenures
beyond the deadline.
Sebi is keen to extend this
requirement to all listed
companies eventually. For
now, it is keeping an eye on
top 500 firms.

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 SEBI Directives

• SEBI has asked listed companies to split the post of Chairman and
Managing Director by April 2020.
• It has also made it compulsory for them to have six independent
directors on board, including a women director.
• The changes, which were first recommended by Kotak Bank chief
Uday Kotak-led committee on corporate governance few months
ago, have now been accepted and notified by SEBI.
• For implementation of changes with regard to split of CMD post, SEBI
has set a deadline of April 1, 2020.
• The deadline for independent directors and other rules is April 1,
2019.

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 SEBI allows longer trading hours for SLB segment

• To facilitate physical settlement in

equity derivatives, SEBI has allowed
stock exchanges to extend the
timing of the stock lending and
borrowing (SLB) segment.

• Stock exchanges can set the trading A derivative is a financial

hours in the SLB segment between security with a value that is
reliant upon or derived from an
9am and 5pm, stated a circular underlying asset or group of
issued by SEBI. assets.

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 SLB (Stock Lending and Borrowing) segment
• SLB segment is typically used by institutional investors to lend or
borrow the shares.
• Early this year in March, SEBI announced the introduction of physical
settlement in the derivatives segment.
• Physical settlement refers to a mechanism wherein contracts are
settled by giving or taking shares instead of cash.

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 SEBI initiated probe in 117 new cases in fiscal year 2018

• A total of 117 fresh cases were

taken up for investigation by (SEBI)
in 2017-18,
• marking a decline of 52 percent
from the preceding financial year,
as per the markets regulator's latest Securities and Exchange Board of
annual report. India (SEBI) initiates investigation
based on reference received from
• The cases were related to alleged sources such as its integrated
violation of securities law including surveillance department, other
market manipulation and price operational departments and
rigging. external government agencies.

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 MCX receives recognition from Sebi for MCXCCL
• Multi Commodity Exchange of India
Ltd. (MCX) received recognition from
SEBI for its Multi Commodity
Exchange Clearing Corporation
Limited
• MCXCCL - first clearing corporation in
the commodity derivatives market.
• MCXCCL, a wholly owned subsidiary MCXCCL will be the central
of MCX, will soon commence its counterparty for all trades executed
on MCX’s trading platform. It will
operations collect margin from the members,
• It will undertake collateral effect pay-in and pay-out and oversee
management, risk management delivery and settlement process, and
functions and clearing & settlement will also facilitate deliverie.
of trades executed on the Exchange.
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 Multi Commodity Exchange of India

• Multi Commodity Exchange of India

Ltd (MCX) is an independent
commodity exchange based in India.
• It was established in 2003 and is
based in Mumbai.
• MCX offers options trading in gold
and futures trading in non-ferrous
metals, bullion, energy, and a
number of agricultural commodities
(mentha oil, cardamom, crude palm
oil, cotton and others).

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 SEBI has done away with category of Sub-Brokers
• Sebi has done away with the category of sub-
brokers as market intermediaries, which
require registration with the regulator.

• Under the current framework, sub-brokers

need to seek registration from Sebi while
authorised persons need to seek registration
from the concerned exchange.

• However, there is no difference in the

operative role of a sub-broker and that of an
authorized person.

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 Who is sub-broker ?

A “Sub-broker” means any person not being a member of a Stock

Exchange who acts on behalf of a Member as an agent or otherwise for
assisting the investors in buying, selling or dealing in securities
through such Member.

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 37 PSUs yet to comply with Sebi's public float norm

• As per the norms, PSUs were

mandated to achieve the minimum
25 per cent public shareholding by
August 21, 2017, which was later
extended by a year.

• Out of the total 89 listed PSUs, 52 As many as 37 listed PSUs

are compliant with the minimum have not complied with
public shareholding requirement of markets regulator Sebi's 25
25 per cent and remaining 37 are per cent minimum public
yet to comply with the rule. shareholding norms

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 What is “float”?

• The float is the number of shares

actually available for trading.

• Float is calculated by subtracting

closely held shares -- owned by
insiders, employees, the
company's Employee Stock
Ownership Plan or other major
long-term shareholders -- from
the total shares outstanding.

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 Investments through P-Notes plunges to 9 year low

• Investments through participatory

notes into Indian capital markets Overseas Investors
plunged to over nine-year low of
Rs 80,341 crore till July-end amid
stringent norms of SEBI.

Foreign Portfolio Investors

• P-notes are issued by registered
foreign portfolio investors (FPIs) to
overseas investors who wish to be
part of the Indian stock market
without registering themselves Indian Stock Market
directly.

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 SEBI on P-Notes

• In July 2017, Sebi had notified stricter norms stipulating a fee of USD
1,000 on each instrument to check any misuse for channelising black
money.

• It had also prohibited FPIs from issuing such notes where the
underlying asset is a derivative, except those which are used for
hedging purposes.

• In April last year, the Securities and Exchange Board of India (Sebi)
had barred resident Indians, NRIs and entities owned by them from
making investment through P-notes.

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 Sebi plans ‘on tap’ bond market

• Capital market regulator Sebi is

preparing the ground to allow ‘on tap
public issue of bonds’.

• A mechanism that will let corporates use

stock exchanges to sell bonds directly to
investors, including retail investors,

• Any time and as many times during a

financial year, after filing a single
prospectus.

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 Features of On Tap Bond Issue

• After filing the tap bond issue prospectus, a corporate can decide
when to enter the market.
• In ‘tap’, a string of formalities like dealing with the registrar,
merchant banker, or issuing new advertisements and application
forms can be done away with.
• It can be multiple times during a financial year depending on the
fund need and market appetite.
• On tap market, which thrives in financial centres like London, would
particularly benefit certain sectors like non-depositing taking non-
banking finance companies which are regular issuers.

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 MCQ’s

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1. Which of the following is incorrect w.r.t. SLB (Stock Lending and Borrowing) segment of stock exchanges?
a) It is typically used by institutional investors to lend or borrow the shares
b) SEBI recently allowed stock exchanges to extend the trading hours of SLB segment
c) Early this year, SEBI announced the introduction of physical settlement in the derivatives segment
d) None of the above is incorrect

2. Which of the following is/are correct w.r.t Multi Commodity Exchange of India?
a) It was established in 2003.
b) It is based in Mumbai.
c) It offers options trading in gold and futures trading in non-ferrous metals
d) All are correct

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3. Float is an important term associated with stock markets. It is calculated by:
a) adding closely held shares to the total shares outstanding
b) subtracting widely held shares from the total shares outstanding
c) subtracting closely held shares from the total shares outstanding
d) None of the above

4. _______ are issued by registered foreign portfolio investors (FPIs) to overseas investors who wish to be
part of the Indian stock market without registering themselves directly.
a) M-Notes
b) P-Notes
c) S-Notes
d) T-Notes

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 ANSWERS
1. D
2. D
3. C
4. B

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SEBI Current Affairs - August 2018

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Thank You! Happy Learning!

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