SEBI cuts time period for filing settlements applications to 60 days
Why in news:
- Markets regulator Sebi has cut the timeline for filing settlement applications to just 60 days from the current 180 days in its effort to make the system more efficient
- Currently, a settlement application can be filed within 60 days of the date of receipt of the show-cause notice.
- However, an additional 120 days can be availed by the applicants in case they pay an additional 25% over the settlement charges.
- These amendments came after Sebi’s board approved proposals in this regard in its meeting last month
About the decision:
- Now, the regulator has done away with the additional time provision of 120 days, according to a notification.
- The move is aimed at rationalising norms on settlement proceedings.
- Further, the time period for submission of revised settlement terms form, after the internal committee (IC), has been rationalised to 15 days.
- This will be from the date of the IC meeting.
- The current rule allows 10 days plus additional 20 days.
- Also, the regulator has issued guidelines pertaining to the procedure to be adopted for arriving at suitable terms pursuant to the filing of a compounding application.
- To encourage the filing of settlement applications during the early stages of the proceedings and to deter forum shopping, Sebi has rationalised the proceeding conversion factor (PCF) values range as 0.40 to 1.50
- Currently, the PCF values range from 0.65 to 1.20 depending upon the stage at which an application for settlement is filed.
- All payments under the settlement regulations will be accepted only through a dedicated payment gateway.
- To give this effect, the Securities and Exchange Board of India (Sebi) has amended Settlement Proceedings norms. Regulations, according to a notification issued on January 14.
The settlement mechanism
- Under the settlement mechanism, an alleged wrongdoer can settle a pending case with the regulator without admission or denial of guilt by paying a settlement fee.
- The settlement mechanism is a tool for ensuring speedy and efficient resolution of disputes.
- Separately, the capital markets regulator has amended norms governing foreign portfolio investors (FPIs).
- In a notification, Sebi has said it can grant exemption to FPIs from strict enforcement of the regulations in other cases.
- Sebi may suo motu or on an application made by an FPI, for reasons recorded in writing, grant relaxation from the strict enforcement of any of the provisions of these regulations.
- This is subject to such conditions as the Sebi deems fit to impose in the interests of investors and the securities market and for the development of the securities market, if the regulator is satisfied that the non-compliance is caused due to factors beyond the control of the entity; or the requirement is procedural or technical in nature, it added.
About SEBI:
- The Securities and Exchange Board of India (SEBI) is the regulatory body for securities and commodity market in Indiaunder the ownership of Ministry of Finance , Government of India
- It was established on 12 April 1988 and given Statutory Powers on 30 January 1992 through the SEBI Act, 1992
- Headquarters – Mumbai
- Chairman – Ajay Tyagi
Functions of SEBI:
The main primary three functions are-
- Protective Function
- Regulatory Function
- Development Function
1. Protective Functions
As the name suggests, these functions are performed by SEBI to protect the interest of investors and other financial participants.
It includes-
- Checking price rigging
- Prevent insider trading
- Promote fair practices
- Create awareness among investors
- Prohibit fraudulent and unfair trade practices
2. Regulatory Functions
These functions are basically performed to keep a check on the functioning of the business in the financial markets.
These functions include-
- Designing guidelines and code of conduct for the proper functioning of financial intermediaries and corporate.
- Regulation of takeover of companies
- Conducting inquiries and audit of exchanges
- Registration of brokers, sub-brokers, merchant bankers etc.
- Levying of fees
- Performing and exercising powers
- Register and regulate credit rating agency
3. Development Functions
This regulatory authority performs certain development functions also that include but they are not limited to-
- Imparting training to intermediaries
- Promotion of fair trading and reduction of malpractices
- Carry out research work
- Encouraging self-regulating organizations
- Buy-sell mutual funds directly from AMC through a broker
Objectives of SEBI:
- The objectives of the Stock Exchange Board of India are:
1. Protection to the investors
The primary objective of SEBI is to protect the interest of people in the stock market and provide a healthy environment for them.
2. Prevention of malpractices
This was the reason why SEBI was formed. Among the main objectives, preventing malpractices is one of them.
3. Fair and proper functioning
SEBI is responsible for the orderly functioning of the capital markets and keeps a close check over the activities of the financial intermediaries such as brokers, sub-brokers, etc.
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