SEBI initiates various measures to reduce the compliance burden of Market Participants in view of the current COVID-19 crisis in the market
The Securities and Exchange Board of India (“SEBI”), through a press release dated 23rd March, 2020, has informed about various measures taken in order to reduce the compliance burden on various market participants in view of the prevailing situation of the COVID-19 (coronavirus disease).
The following measures has been taken by SEBI to relax the compliance burdens:
- The penal provision for non-collection/short collection of margins by brokers which was to be implemented from 1st April, 2020 has been deferred till 30th April, 2020. However, reporting of non-collection/short collection of margins in the cash and derivatives segment has to be continued to be done by the brokers.
- The National Institute of Securities Market (NISM) certifications which are expiring during the period from 15th March, 2020 to 29th June, 2020 have been extended till 30th June, 2020.
- Trading members working from designated alternate locations are exempted from the penal provisions for not maintaining call recordings of orders/instructions received from clients till 31st March, 2020. However, the trading member and the Stock Exchange must send a confirmation on the registered mobile number of the client immediately after execution of the Order.
- The delay in submission of various reports by trading members will not attract penal provisions till 30th April, 2020.
- Trading members will be placed in risk reduction mode upon utilization of 90 per cent (instead of existing level of 85 per cent) of the members’ capital towards margins.
- The implementation of SEBI circular dated 20th September, 2019 for risk management framework for liquid schemes of mutual funds has been extended by one month, i.e. up to 1st May, 2020.
- The implementation of SEBI circular dated 1st October, 2019 for existing open ended debt oriented mutual fund schemes are to comply with the revised limits for sector exposure, has been extended by one month, i.e. up to 1st May, 2020. Further, the timeline to hold not in excess of 15% in unlisted Non-convertible Debentures (NCDs) has been extended till 30th April, 2020.
- The implementation of SEBI circular dated 24th September, 2019 for Valuation of money market and debt securities based on market to market valuation has been extended by one month, i.e. up to 1st May, 2020.
- The half yearly disclosures of unaudited financial results mandated under the provisions of the SEBI (Mutual Funds) Regulations,1996, has been extended by one month, i.e. up to 31st May, 2020.
- The disclosure of commission paid to distributors as mandated by SEBI circular dated 18th March, 2016, has been extended by one month, i.e. up to 10th May, 2020.
- The yearly disclosure of investor complaints with respect to Mutual Funds as mandated in SEBI circular dated 13th May, 2010, has been extended by one month, i.e. up to 30th June, 2020.
- The validity of SEBI observation letter for New Fund Offer by Mutual Funds has been extended by 6 months. Thereby, Mutual Funds can launch schemes within a period of one year from the date of the SEBI letter.
- The access control presently exercised in the Asset Management Companies dealing room, including call recording of deals is temporarily relaxed subject to checks and balances including electronic confirmation by way of e-mail or other system having audit trail.
Further, SEBI has also informed that the Government of India has requested the State governments/Union Territories to keep the services of stock market entities, exempted from the purview of lockdown and to permit the essential staff of the stock market participant to commute, so as to ensure that the SEBI regulated stock market entities function smoothly.