SEBI Update: Stock brokers will no longer be able to commit fraud, there will be IPO-like system in the stock market too – sebi to put in place framework to prevent frauds by stock brokers
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SEBI’s board decided to introduce the facility of application (application supported by blocked amount) for investors with ‘block’ amount in their account for purchase and sale of shares available in the stock market. It is an alternative mode of payment for the issue. In this, the money of the investors who applied for the issue remains in their account till the situation regarding the allotment of the issue is cleared. The amount is deducted from the account only after getting the IPO. Now this facility will be optional for investors as well as stock brokers. Its objective is to increase efficiency in the stock market environment. This would allow meeting margin and settlement obligations. This will result in less working capital requirement for the members.
Fund will be blocked like IPO
SEBI said in a statement that under the proposed framework, stock brokers would be permitted to either settle brokerage directly with UPI customers or opt for the facility of the clearing corporation to deduct the standard rate of brokerage from the customers’ UPI block. . The system will be implemented in a phased manner to ensure a smooth transition to the market. With the new facility, customers will be able to earn interest on their ‘block’ amount in the savings account till the amount is exhausted. The market regulator also approved the regulatory framework for private equity funds to become sponsors of mutual funds. This move will help in promoting mutual funds. Sebi’s decision comes in the backdrop of the acquisition of IDFC Mutual Fund by a consortium of Bandhan Financial Holdings Ltd, GIC and private equity fund ChrysCapital.
With this, SEBI permitted self-sponsored asset management companies (AMCs) to carry on mutual fund business. However, the AMC will get this exemption only if certain conditions are met. The Board also approved the proposal to constitute Unit Holders Protection Committee (UHPC). This step has been taken to protect the interest of the unit holders. SEBI has also approved a draft to enhance the role and accountability of trustees of mutual funds. Apart from this, it has also been decided to set up Corporate Debt Market Development Fund as an alternative investment fund. The fund can raise finance for purchase of corporate debt securities in case of market volatility.
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