By Shyamu Maurya
Copyright informalnewz
SEBI has proposed introducing a three-year IPF claim lookback period. Under this, only transactions made three years prior to the member’s declaration as a defaulter will be eligible for IPF claims. This will reduce the number of old and repeated claims.
SEBI has proposed simplifying several regulations related to stock exchanges. These include setting a deadline for filing claims in case of defaulting brokers. The regulator wants to tighten regulations for promoters of exclusively listed companies. The regulator has also proposed merging the investor protection funds (IPFs) of the exchange’s equity and derivatives segments. However, most of SEBI’s proposals focus on the ease of doing business at the exchanges.
Proposal to introduce IPF claim lookback period
SEBI has proposed introducing a three-year IPF claim lookback period. Under this, only transactions completed three years prior to the member’s declaration of default will be eligible for IPF claims. This will reduce the number of old and repeated claims. The regulator’s proposal states that MSECC regulations will be amended to make eligible claims only for those underlying transactions that occurred within three years prior to the declaration of default.
Plan to merge equity and commodity IPFs
The regulator has also proposed merging the equity and commodity IPFs. SEBI has stated that exchanges will maintain a single IPF covering both equity and commodity segments. This will facilitate contributions, utilization, deployment, and governance, and will also meet the needs of the commodity segment. SEBI believes that having a single IPF will facilitate the exchanges’ needs. However, this merger will primarily focus on maintaining equivalent funds for commodity-derivative exchanges.
Restrictions on IPF interest usage to be lifted
A proposal has also been introduced to remove a specific restriction on NSE’s use of IPF interest. SEBI wants to bring parity among exchanges in IPF matters. To achieve this, it plans to remove the restriction that NSE has to use the entire IPF interest of investor claims. This restriction was imposed in 2020. It is planned to be changed after receiving representations from NSE.
Rules to be stricter for promoters of exclusively listed companies
The market regulator has also introduced a significant proposal for companies listed exclusively on the Dissemination Board (DB). Such companies will be required to submit an action plan to the designated exchange within three months of joining the DB. SEBI believes that the current regulations do not specify a timeline for submitting the action plan. This gives unnecessary leeway to the ELC, creating uncertainty for shareholders. Therefore, a three-month submission timeline has been proposed.