SEBI Measures - Trustline Blog

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SEBI Measures - Trustline Blog

• Overall, it is likely to make the capital markets
  a better place In its board meeting last week,
  the capital market regulator, SEBI, made some
  significant announcements. The current SEBI
  chairperson, Mr. Tyagi, has been very particular
  about making the capital markets friendlier for
  the investors. The latest SEBI board meet focused
  on a numberhellip

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SEBI Measures - Trustline Blog
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SEBI Measures Overall, it is likely to make the
capital markets a better place In its board
meeting last week, the capital market regulator,
SEBI, made some significant announcements. The
current SEBI chairperson, Mr. Tyagi, has been
very particular about making the capital markets
friendlier for the investors. The latest SEBI
board meet focused on a number of areas including
3 of immediate interest for the equity investors.
Here are some of the key implications of the
announcements. Mutual fund impact
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The regulator had been indicating at a re-haul of
the fund cost structure for quite some time now.
Fund costs or the total expense ratio (TER), is
relatively high in India for mutual funds. An
equity fund has an outer limit of 2.50 at the
peak level and goes down with the AUM levels.
Then there are 30 bps incentives for selling
mutual funds in smaller towns and also a
compensation for the GST paid on the management
fees. The overall cost, therefore, goes up closer
to 3 in most cases. SEBI has not only reduced
the upper limit across all brackets by 25 basis
points, but also urged funds to reduce the
effective cost overall. The impact was visible on
the stock price of HDFC AMC and Reliance AMC as
it is now clear that the only way the TER will
move is down. From a customer point of view, this
is good news, especially when alpha is going to
be a lot more difficult going ahead. Lower costs
will really matter a lot for the investors at
that point of time. Definition of insider This
was something that was long coming. The regulator
has decided to expand the definition of an
insider to include business associates, family
members, vendors, franchisees etc. The current
definition was quite narrow and it permitted
insider trading through proxies in most cases.
That will essentially get plugged. Secondly, SEBI
has also made distributors of SMS messages,
WhatsApp messages and media analysts responsible
and accountable for the outcome of their
statements and actions. For example, the analyst
or trader will now have to be more careful since
they will be answerable in case any undue
volatility or panic is created in the stock by
such statements. It could be an open ended case
but will go a long way in checking the misuse of
informal media. IPO timelines crunched The SEBI
board meeting has also crunched the total time
for completion of the IPO process from T6 days
to just T3 days. This will enable the investors
to monetize their liquidity much faster. With
ASBA in place, the time value loss will be
minimal. Of course, banking could still be an
issue but SEBI also proposes to allow UPI
transactions in case of IPO applications. If that
works out then the Indian IPO market could become
a truly efficient market and also a lot safer.