Sebi board approves norms for commexes

MUMBAI: The Sebi board on Monday approved a host of proposals for commodity derivatives exchanges and their members, tweaked rules for anchor investors in public issues and employee stock options (ESOPs).

The regulator said it would review policy relating to forfeiture of partly-paid shares and clearing corporations.

The merger of FMC with Sebi will be completed on September 28, 2015. Following this, commodity exchanges and their broker members will be regulated by Sebi, paving the way for repealing of the Forward Contracts Regulation Act,1952, which currently governs the commodity exchanges.

The major compliances would include norms related to networth, shareholding, composition of board, corporatisation and demutualisation, turnover and infrastructure, among others.

To ensure non-disruptive transition, Sebi has prescribed timelines for complying with its different provisions.

“The proposed norms also emphasise on strengthening of risk management of the exchanges. Further, investor protection norms similar to the equity markets would be provided by strengthening the arbitration mechanism and investor grievance redressal mechanism,” the regulator said in arelease posted on its website. Sebi has also removed the current restriction on the maximum number of anchor investors (currently 25) for anchor allocation of above Rs 250-crore public issue.

“While the requirement of a number of anchor investors for allocation of up to Rs 250 crore remains the same, in case of allocation beyond Rs 250 crore, there can be 10 additional investors for every additional allocation of Rs 250 crore, subject to a minimum allotment of Rs 5 crore per anchor investor,” Sebi said.

The regulator has also clarified that exercise of ESOPs would not be considered as trading. This will remove the difficulties of the senior company officials with regard to exercise of ESOPs and the sale of shares so acquired.

The 2015 Sebi Regulations on pro-hibition of insider trading do not specify the trading restrictions on exercise of ESOPs, and hence, ambiguity prevailed with respect to treatment of such options.

“In view of the clarification provided by Sebi, an employee should be able to exercise the ESOPs even though such employee has sold shares during the previous six months and the same shall not be regarded as a contra trade, which otherwise is prohibited,” said Tejesh Chitlangi, partner at IC Legal.

“However, once shares are acquired through ESOPs, then selling of such shares may still attract the six month contra-trade prohibition and such similar prohibition may exist on buying once the shares acquired through exercise of ESOPs are sold,” he said.

Sebi also said it would seek public comments on the KV Kamath report, which has examined the viability of single clearing corporation or interoperability between multiple clearing corporations and other issues related to them.