DSE recognition : Sebi today withdrew the recognition granted to the bourse.

 Finding "serious irregularities" in the functioning of Delhi Stock Exchange, Sebi today withdrew the recognition granted to the bourse.

The capital market watchdog has also observed that activities of DSE were "carried out in a manner contrary to the interest of the investors."

"...hereby withdraw the recognition granted to Delhi Stock Exchange," Sebi Whole Time Member Prashant Saran said in a 19-page order.

The regulator will take all necessary steps consequential to the derecognition.

"I note that serious irregularities have been found in the functioning of DSE at the time when DSE was taking steps for demutualisation," Saran said.

"It is seen that for completing the demutualisation process the erstwhile board of DSE had overlooked the due transfer of shares in the demat accounts and receipt of the funds by the 'appointed date'," he added.

Further, DSE acted in a irregular manner in case of "releasing the funds to the merchant banker, without receipt of the application money, allotment of shares to media company and in turn awarding them media contract etc, without any corresponding utilisation of media space."

Among others, Sebi rules pertaining to demutualisation requires every stock exchange to sell brokers' 51 per cent equity to separate their trading and ownership rights.

Present governing board of DSE admitted that a false certificate of completion of demutualisation process has been submitted by the erstwhile management of the exchange.

"It is seen that the present management, even after getting to know about the irregularities committed by the erstwhile management, has not initiated any action," the Securities and Exchange Board of India (Sebi) said.

"From the same, it can be concluded that DSE had failed to complete the demutualisation process before the 'appointed date," Sebi said

Therefore, the recognition granted to DSE was withdrawn, it added.

PT I Nov 20, 2014

Sebi may tighten disclosure norms to check manipulation

Source :4 DEC, 2010, 11.16AM IST, SANTOSH NAIR,ET BUREAU 

 Amid several instances of market manipulation , capital market regulator Sebi may tighten disclosure rules to check operators and company promoters cutting bulk trades outside the regulator’s radar, feel fund managers and brokers. 

It is common knowledge in market circles that most promoters control undeclared investment arms through which they buy and sell shares of their companies. This helps them evade creeping acquisition norms and other mandatory disclosures. 

“It appears there is enough evidence with Sebi to show how open offer regulations have been side-stepped by purchasing shares through multiple entities carrying out bulk trades. It’s likely that Sebi may ask bulk trade participants to reveal themselves,” said a Mumbai-based broker. 

Recent investigations show that it’s possible for market operators to buy large blocks of shares well exceeding the open offer trigger limit of 15%. 

“In Sangam India , the Dangi group, along with Ashika Group on November 23, 2010, had provided an exit route to investors such as Swiss Finance Corporation (Mauritius) and India Advantage Fund-I which were approximately holding 23.01% share capital in the said company,” said Thursday’s Sebi report on share trader Sanjay Dangi and entities controlled by him, alleged to be rigging share prices in collusion with the promoters. Sangam officials were not available for comment. 

Broker-members are required to disclose to the stock exchanges all transactions for a client wherever the total quantity bought or sold is more than 0.5% of the equity shares of that company. This is referred to as a bulk deal. A block deal is one which is for a minimum of five lakh shares or a trade worth Rs 5 crore. 

Fund managers and brokers say that one way of curbing malpractices would be for the regulator to relax norms for block deals and ensure that large deals are done through this window. The block deal window on the BSE and NSE — for a minimum of 5 lakh shares or for trades worth Rs 5 crore — is open for only the first half an hour of the trading session. 

The transaction price can’t be more than plus or minus 1% of the previous day’s closing price, if the deals are struck right at the start of the session, or plus or minus 1% of the prevailing market price once trading commences for the day. 

Brokers say that when it comes to large trades in mid-cap stocks, many fund managers prefer to route the trades through the regular window. One reason is that the buyer may want to keep his identity secret. This is not possible, if the trade has been done through the block deal window: identity of both the buyer and seller has to be disclosed. 

Another reason, allege market watchers, is that bypassing the block deal window facilitates front-running — an illegal activity in which a trader takes a position in an equity based on advance information of an impending trade. 

“Bulk deals are always negotiated, with the broker(s) finding a counterparty before entering the order on the trading screen,” says a BSE broker , adding that promoters often use undeclared investment arms to absorb heavy selling in their stock from institutional investors. “But they buy in small chunks so as not to trigger the 0.5% limit for disclosing trades to the bourses,” the broker said. 

Last week, India Advantage Fund and Swiss Finance Corporation together sold around 90 lakh shares of Sangam. Of which, around 63 lakh shares were picked by Sanjay Dangi-controlled Pacific Corporate Services and Ashika Group-backed Withal Commercial. According to Sebi regulations, if entities or persons acting in concert acquire more than 15% in a company, they have to make an open offer for additional 20% of the company’s equity. 

In the case of Sangam India, the Dangi and Ashika groups were acting in concert, as the Sebi investigation showed. 

Overseas investors play the market a lot more than SEBI data show

RBI numbers point to even bigger swings.

Source : Business line :Lokeshwarri S.K:BL Research Bureau:Chaeeai:sep 20,2010

If investors went by the SEBI data alone, then it would seem that Foreign Institutional Investors (FIIs) pulled out almost $12 billion from Indian equity in 2008, making equity prices spiral down hopelessly. But, do you know that depletion in portfolio investment of external investors was a more staggering $34.8 billion in that year, according to the RBI data on such investments?

The numbers put out by SEBI are widely followed, because the data are published every day, making it a major sentiment-driver in the Indian stock market. On the other hand, the International Investment Position (IIP) report published by the RBI is quarterly and comes with a lag of one quarter, thus giving it little short-term interest.

As the above-mentioned figures show, portfolio investments by FIIs reported by the RBI at the end of every quarter, and the cumulative FII investment reported by SEBI on the same date, invariably differ as shown in the adjacent graph. The difference tends to widen in times of greater volatility and is narrower in more sedate periods.

In 2007, the year of the raging bull market, FII investments in equity increased by $43 billion, according to the IIP report. SEBI reported a more modest growth of $18 billion in that period.

The sharp appreciation of the rupee in 2007, RBI's apprehensions about managing humungous inflows, SEBI's clamping down on overseas derivative instruments et al, can be understood better against the backdrop of RBI's numbers than against SEBI's.

In the quarter to June 2009, when stock prices rose vertically after the UPA Government came to power, the IIP report showed a jump of $12.5 billion in FII portfolio position, while the increase in FII investment, according to SEBI, was half that number, at $6 billion.

Again, if we consider the quarter to December 2008, when the credit crisis was the most acute, following the Lehman collapse and hedge funds going on a selling spree, IIP reported erosion in FII position of $9.2 billion while SEBI reported a much lower number at $3.3 billion.

Why different

The most important reason for the difference in the numbers reported by RBI and SEBI is that they differ in the point of capture. While the IIP report is based on the transactions put through by FIIs in their custodial accounts held with banks and hence the inflow or outflow is captured when the money enters or leaves the country, SEBI data arebased on the actual purchase and sales of securities in primary or secondary market.

It is, therefore, possible that un-invested funds lying in custodial accounts would account for part of the difference. Profit booked by FIIs in the stock exchanges that have not been re-invested would also increase the FII portfolio investments as reported by the central bank. Similarly, losses booked in stock exchanges would deflate this number.

The other reason for the difference is that SEBI data captures only fund flow in to cash segment of the exchanges and does not account for the margin money that FIIs hold for trading in derivatives. This portion of FII funds is short-term money and could see greater inflow and outflow in times of turbulence. Fluctuation in the Indian rupee could be yet another cause for this disparity.

Sebi panel to discuss select MF products on May 31

Source : :PTI May 17 2010

A committee of market regulator SEBI will consider the issue of restricting mutual funds

from selling an equity product that involves betting on future prices.

The SEBI Mutual Fund Advisory Committee is concerned that this is not mutual funds' core activity and may take a decision on May 31.

Equity options is a derivative product where investors bet on future value of stocks or their indices and SEBI is against mutual funds getting into the hedging business, as it could suffer losses.

In a letter sent to all fund houses recently, SEBI had sought proposals from asset management companies (AMCs), regarding selling of equity options and an increased disclosure of their investment in this segment, sources in fund houses said.

Mutual funds have already submitted their view to SEBI and they may be reviewed at the SEBI's Mutual Fund Advisory Committee meeting scheduled on May 31.

"MF industry body Association of Mutual Funds of India (AMFI) has already submitted its views in consultation with industry players. The proposal would be discussed on May 31," a SEBI source said on condition of anonymity.

The market regulator on its part wants the fund houses to control the risk exposure and clearly demarcate their risky exposure, he added.

Industry players said, "SEBI has been looking at ways and means of regulating distribution of MF products and also MFs investment in derivatives."

The steps are part of SEBI's move to control the risk taken by MFs, analysts said.

Selling an option usually involve huge losses as the underwriter gets exposed to unlimited risks when market becomes volatile or collapses or hits the upper circuit.

"The objective of SEBI could be to ensure that MFs can hedge by buying options, but they should not underwrite the option as it is not the core business of MFs to take risk this way," an analyst at a brokerage house said.

In order to increase accountability on the part of fund houses, the market regulator had last week asked AMCs to disclose the details of investor complaints on websites, as well as in annual reports.

Now all AMCs will have to put up the data for the bygone fiscal by June 30, 2010, and for each new fiscal within two month of the close of the fiscal year.

In order to increase investor interest in MFs, the market regulator had last year abolished entry load and asked fund houses not to deduct marketing and distribution charges from the investment made by customers.

SEBI cuts time between issue closure and listing to 12 days

Source: Moneylife:April 06, 2010 07:39 PM

Market regulator Securities and Exchange Board of India (SEBI) has said that it proposes to reduce the time between public issue closure and listing to 12 days from the existing (up to) 22 days. This will be applicable to public issues opening on or after 1 May 2010, SEBI said in a release.

The market regulator said that the new process would require syndicate members to capture all data relevant for the purposes of finalising the basis of allotment while uploading bid data in the electronic bidding system of the stock exchanges. To ensure that the data so captured is accurate, syndicate members would be permitted an additional day to modify some of the data fields entered by them in the electronic bidding system, it said.
The registrar to the issue is required to validate the bids and finalise the basis of allotment only on the basis of the final electronic bid file provided by the stock exchanges, SEBI said.

The market regulator said that the lead managers and their agents would be responsible for the accuracy of data entry and for resolving investor grievances. Further, the application supported by blocked amount (ASBA) process would also undergo suitable modification to make it consistent with these timelines, SEBI added.

TCS’ Ramadorai is BSE chairman

TCS’ Ramadorai is BSE chairman

9 Mar, 2010, 1017 hrs    

MUMBAI: The Bombay Stock Exchange has appointed 

TCS vice-chairman S Ramadorai as the chairman of the bourse.


The decision to appoint Ramadorai as chairman was taken at a BSE board meeting held here. Currently, the BSE board has 10 members, including managing director Madhu Kannan.

Serving as the vice-chairman of Tata Consultancy Services (TCS), Ramadorai has been associated with the IT major for the past 37 years.

Last week, Jagdish Capoor resigned from the post of non-executive chairman as well as from the board of BSE on health grounds.

Ramadorai took over as the CEO of TCS in 1996 and has been instrumental in building TCS to a $6-billion company.
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