Centralized Database for Corporate Bonds/Debentures

Centralized Database for Corporate Bonds/Debentures

“High Level Expert Committee on Corporate Bonds and Securitization” (“Dr. R.H. Patil Committee”) had recommended creation of “Centralized Database of information regarding Bonds” .  While the information in respect of various bonds/debentures issued by issuers is available in a fragmented manner, it is felt that there is a need for having a comprehensive database on corporate bonds at a single place.

Considering the above, SEBI has issued a circular on “Centralized Database for Corporate Bonds/Debentures” on October 22, 2013. SEBI has mandated both the depositories viz. NSDL and CDSL to jointly create, host, maintain and disseminate the centralized database of corporate bonds/debentures. The depositories shall obtain requisite information regarding the bonds/debentures from Issuers, Stock Exchanges, Credit Rating Agencies and Debenture Trustees. The Database can be accessed by the public or any other users without paying any kind fees or charges which will help to strengthen the debt market in the country. Depositories and stock exchanges shall create awareness among issuers and investors regarding the centralized database.

As per Sebi norms in this regard, the depositories would maintain and disseminate the information in dematerialized form or electronic form. The database for such unlisted securities and provision of data in physical form would be subsequently considered,

Depositories will have adequate systems and safeguards to maintain the integrity of the data and to prevent manipulation of the data. Depository will synchronize the database in consultation and sharing with other depository.

For historical information with respect to debentures/bonds for which ISIN number is already obtained and bond/debenture is still outstanding (historical information), the Depositories shall by 01 December 01 2013 request the Issuers to provide the information. The Issuers shall provide the information to the Depositories by 01 January 2014 in the manner prescribed by Depositories.

 

SEBI CIRCULAR for CIR/MRD/DP/10/2013 Usage of electronic payment modes for making cash payments to the investors

SEBI CIRCULAR: SEBI CIRCULAR for CIR/MRD/DP/10/2013  Usage of electronic payment modes for making cash payments to the investors.  For making cash payments to the investors, companies whose securities are listed on the stock exchanges shall use, either directly or through their RTI & STA, any RBI (Reserve Bank of India) approved electronic mode of payment such as ECS [ LECS (Local ECS) / RECS (Regional ECS) / NECS (National ECS) ], NEFT, etc. Further,  in  order  to  enable  usage  of  electronic  payment  instruments, companies whose securities are listed on the stock exchanges (or their RTI & STA) shall maintain requisite bank details of their investors

CIR/MRD/DP/10/2013, March 21, 2013

To, All Companies whose securities are listed on Stock Exchanges (through Stock Exchanges); All Registrars to an Issue and Share Transfer Agents (RTI & STA); All Depositories; All Stock Exchanges.

Dear Sir / Madam,

Sub: Usage of electronic payment modes for making cash payments to the investors

1. Please refer to SEBI circular no. DCC/FITTCIR-3//2001 dated October 15, 2001 and circular no D&CC/FITTC/CIR-04/2001 dated November 13, 2001 on usage of ECS (Electronic Clearing Services) facility and warrants for distribution of dividends or other cash benefits to the investors.

2.  Advancements in the field of electronic payment systems in the last decade have made available various other modes of electronic funds transfer viz. National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS), etc. In view of such advancements, it has been decided to modify the framework as under:

(a)       For making cash payments to the investors, companies whose securities are listed on the stock exchanges shall use, either directly or through their RTI & STA, any RBI (Reserve Bank of India) approved electronic mode of payment such as ECS [ LECS (Local ECS) / RECS (Regional ECS) / NECS (National ECS) ], NEFT, etc.

(b)       Further,  in  order  to  enable  usage  of  electronic  payment  instruments, companies whose securities are listed on the stock exchanges (or their RTI & STA) shall maintain requisite bank details of their investors –

(i)   For investors that hold securities in demat mode, companies or their RTI & STA shall seek relevant bank details from the depositories. To this end, vide circular  SEBI/MRD/DEP/Cir-3/06 dated February 21, 2006 and letter  MRD/DEP/PP/123624/2008  dated  April 23, 2008,  depositories have been advised to ensure that correct account particulars of investors are available in the database of depositories.

(ii)  For   investors   that   hold   physical   share /  debenture   certificates, companies or their RTI & STA shall take necessary steps to maintain updated bank details of the investors at its end.

(c)        In  cases  where  either  the  bank  details  such  as  MICR  (Magnetic  Ink Character Recognition), IFSC (Indian Financial System Code), etc. that are required for making electronic payment are not available or the electronic payment  instructions  have  failed  or  have  been  rejected  by  the  bank, companies or their RTI & STA may use physical payment instruments for making cash payments to the investors. Companies shall mandatorily print the bank account details of the investors on such payment instruments.

3.         Stock exchanges are directed to bring the provisions of this circular to the notice of all the companies whose securities are listed on the stock exchange and also to disseminate the same on their website.

4.         All companies whose securities are listed on Stock exchanges and their RTI & STA are directed to comply with the provisions of the circular.

5.         Depositories are directed to provide to companies (or to their RTI & STA) updated bank details of their investors.

6.      This  circular  shall  supersede  circular  no.  DCC/FITTCIR-3//2001  dated October 15, 2001 and circular no D&CC/FITTC/CIR-04/2001 dated November 13, 2001.

7. This circular is being issued in exercise of powers conferred under Section

11 (1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

Yours faithfully

Download SEBI Circular CIR/MRD/DRMNP/9/2013 for Corporate bonds and Government securities as collateral

SEBI CIRCULAR: Download SEBI Circular CIR/MRD/DRMNP/9/2013 for Corporate bonds and Government securities as collateral.

CIR/MRD/DRMNP/9/2013, March 20, 2013

To, All Stock Exchanges & Clearing Corporations, All Registered FIIs and Custodians

 Sir / Madam,

 Sub: Corporate bonds and Government securities as collateral

1.  Please refer to SEBI circular Nos. SEBI/DNPD/Cir- 32/2007 dated September 11,2007 and CIR/MRD/DP/15/2010 dated April 28, 2010 permitting FIIs to offer, as collateral, cash and foreign sovereign securities with AAA rating in F&O segment and cash, foreign sovereign securities with AAA rating and government securities in cash segment.

2.  The Hon’ble Finance Minister, in his announcement in the Union Budget for the year 2013 -14, has proposed, inter-alia, to permit FIIs to use their investment in corporate bonds and Government securities as collateral to meet their margin requirements towards their transactions on the recognized Stock Exchanges in India.

 3.  Reserve Bank of India vide RBI/2012-13/439 A.P. (DIR Series) Circular No. 90       dated March 14, 2013 has permitted FIIs to use, in addition to already permitted collaterals,  their  investments  in  corporate  bonds  as  collateral  in the cash segment and government securities and corporate bonds as collaterals in the F&O segment.

4.  In  light  of  the  above,  henceforth  FIIs  are  permitted  to  offer  the  following collaterals – government securities, corporate bonds, cash and foreign sovereign securities  with  AAA  ratings,  for  their  transactions  in  both  cash  and  F&O segments. In this regard, the stipulations specified by SEBI and RBI with regard to the acceptance of various collaterals shall be adhered to.

5.  Further, Clearing Corporations while enabling the framework for acceptance of corporate bonds as collateral for transactions of any entity in the cash and F&O segments, shall ensure that:

i)   The  bonds  shall  have  a  rating  of  AA  or  above       (or  with  similar  rating  nomenclature) by recognised credit rating agencies.

ii)  The bonds shall be in dematerialized form.

iii) The bonds shall be treated as part of the non-cash component of the liquid assets of the clearing member and shall not exceed 10% of the total liquid assets of the clearing member.

iv) The bonds shall have a fixed percentage based or VaR based haircut. A higher haircut may be considered to cover the expected time frame for liquidation. To begin with the haircut shall be a minimum of 10%.

6.  The earlier circulars issued by SEBI with regard to acceptance of collaterals stand modified accordingly.

7.  The Stock Exchanges/Clearing Corporations are advised to:

a.  make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision.

b.  bring   the   provisions   of   this   circular   to   the   notice   of   the   member brokers/clearing members of the Exchange/Clearing Corporation and also to
disseminate the same on the website.

c.  communicate to SEBI, the status of the implementation of this circular in the Monthly Development Report.

 8.  This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 read with Section 10 of the  Securities  Contracts (Regulation)  Act, 1956  to  protect  the  interests  of investors in securities and to promote the development of, and to regulate the securities market.

Yours faithfully,

Download Sebi CIRCULAR CIR/IMD/DF/5/2013 for Product Labeling in Mutual Funds

SEBI CIRCULAR: Download SEBI CIRCULAR CIR/IMD/DF/5/2013 for Product Labeling in Mutual Funds.  Level of risk, depicted by colour code boxes as under:

  • Blue – principal at low risk.
  • Yellow – principal at medium risk.
  • Brown – principal at high risk.

CIR/IMD/DF/5/2013, March 18, 2013

All Mutual Funds/Asset Management Companies (AMCs)/ Trustee Companies/Boards of Trustees of Mutual Funds/

Sir/ Madam,

Sub: Product Labeling in Mutual Funds

1.  In order to address the issue of mis-selling, a Committee was set up to examine the system of Product Labeling that would provide investors an easy understanding of the kind of product/scheme they are investing in and its suitability to them. Based on the recommendations of the Committee, it has been decided that all the mutual funds shall ‘Label’ their schemes on the parameters as mentioned under:

a.  Nature of scheme such as to create wealth or provide regular income in an indicative time horizon (short/ medium/ long term).

b.  A brief about the investment objective (in a single line sentence) followed by kind of product in which investor is investing (Equity/Debt).

c.  Level of risk, depicted by colour code boxes as under:

  • Blue – principal at low risk.
  • Yellow – principal at medium risk.
  • Brown – principal at high risk.

The colour codes shall also be described in text beside the colour code box.

d.  A disclaimer that investors should consult their financial advisers if they are
not clear about the suitability of the product.

e.  Few  samples  of  product  label  for  different  schemes  are  illustrated  at

Annexure I.

2.   Product label shall be disclosed in:

a.  Front page of initial offering application forms, Key Information Memorandum
(KIM) and Scheme Information Documents (SIDs).

b.  Common application form – along with the information about the scheme.

The product label with respect to (a) & (b) above shall be placed in proximity to the caption of the scheme and shall be prominently visible.

c.  Scheme advertisements – placed in manner so as to be prominently visible to
investors.

3.   This circular shall be applicable with effect from July 1, 2013, to all the existing schemes and all schemes to be launched on or thereafter. However, mutual funds may choose to adopt the provisions of this circular before the effective date.

4.   This circular is issued in exercise of the powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act 1992, read with the provision of Regulation 77 of SEBI (Mutual Funds) Regulation, 1996 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

Yours faithfully,

Annexure I

Few samples of product label for different schemes are illustrated as under:

1.  Enumeration of Product label of an Fixed Maturity Plan (FMP)

Product Label

This product is suitable for investors who are seeking*:

  • regular fixed income for short term.
  • investment in Debt/Money Market Instrument/Govt. Securities.
  • low risk.           (BLUE)

*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

Note: Risk may be represented as:

(BLUE) investors understand that their principal will be at low risk

(YELLOW) investors understand that   their principal will be at medium risk

(BROWN) investors understand that  their principal will be at high risk

2.  Enumeration of Product label of a Hybrid Scheme

Product Label

This product is suitable for investors who are seeking*:

  • long term capital appreciation and current income.
  • investment in equity and equity related securities as well as fixed income
    securities (debt and money market securities).
  • medium risk.           (YELLOW)

*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

Note: Risk may be represented as:

(BLUE) investors understand that              (YELLOW) investors understand that            (BROWN) investors understand that

their principal will be at low risk                  their principal will be at medium risk                their principal will be at high risk

3.  Enumeration of Product label of an Equity Scheme

Product Label

This product is suitable for investors who are seeking*:

  • long-term capital growth.
  • investment in equity and equity-related securities including equity derivatives of
    top 200 companies by market capitalisation.
  • high risk.           (BROWN)

*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

Note: Risk may be represented as:

(BLUE) investors understand that              (YELLOW) investors understand that            (BROWN) investors understand that

their principal will be at low risk                  their principal will be at medium risk                their principal will be at high risk

Download SEBI CIRCULAR CIR/MRD/ICC/ 8 /2013 for Arbitration Mechanism through Stock Exchanges – Introduction of Automatic Process and Common Pool of arbitrators.

SEBI CIRCULAR: Download SEBI CIRCULAR CIR/MRD/ICC/ 8 /2013 for Arbitration Mechanism through Stock Exchanges – Introduction of Automatic Process and Common Pool of arbitrators.

 CIR/MRD/ICC/ 8 /2013, March 18, 2013

 All Stock Exchanges having nation-wide trading terminals

Dear Madam/Sir,

Sub: Arbitration Mechanism through Stock Exchanges – Introduction of Automatic Process and Common Pool of arbitrators.

SEBI  has  received  inputs  from  investors  regarding  functioning  of  the  arbitration mechanism at the Stock Exchanges. In light of which, you are advised to carry out the following changes in the arbitration mechanism.

 1.   List of Arbitrators on the panel of all stock exchanges having nation-wide trading terminals shall be pooled and will be called a ‘Common Pool’. This list shall be made  publicly available including by way of display on websites of the stock exchanges.

 2.   ‘Common pool’ of Arbitrators will consist of Arbitrators listed on the panels of all stock exchanges having nation-wide trading terminals. The pooling of arbitrators will be done centre-wise. To illustrate, the list of arbitrators on the panel of all stock exchanges for the region covered by the Delhi centre will be pooled. This would enable an applicant from the region to choose any arbitrator from the ‘Common Pool’ for Delhi. If the client and member (stock broker, trading member or clearing member) fail to choose the Arbitrator(s) from the Common Pool, the Arbitrator(s) will be chosen by an ‘Automatic Process’ wherein neither the parties to arbitration (i.e. client or member) nor the concerned Stock Exchanges will be directly involved.

 3.   The ‘Automatic Process’ will entail a randomized, computer generated selection of Arbitrator, from the list of Arbitrators in the ‘Common Pool’. The selection process shall be in chronological order of the receipt of arbitration reference i.e. only after selecting an arbitrator for the former arbitration reference received, selection for the latter shall be taken up.

4.   The ‘Automatic Process’ will send a system generated, real time alert (sms, email etc.) to all entities involved in the particular case. Further, the communication for the appointment of the Arbitrator will be sent immediately and in any case not later than the next working day from the day of picking of the Arbitrator. This communication will be sent by the stock exchange on which the dispute had taken place, to all concerned entities including clients, arbitrators, members, stock exchanges etc.

5.   The selection of Arbitrators by Stock Exchanges as done currently, shall henceforth be replaced by the ‘Automatic Process’.

6.   In case of any probable conflict of interest in an arbitration reference being assigned to any Arbitrator the Arbitrator will have to upfront decline the arbitration reference. After the said arbitrator declines, the ‘automatic process’ will pick the name of another Arbitrator. This will continue till the time there is no conflict of interest, by the selected  arbitrator.  In  this  regard,  the  timelines  mentioned  at  clause 5.3  in  CIR/MRD/DSA/24/2010 dated August 11, 2010 of 30 days might get extended. However, SEs shall put on record the reasons of such extension.

7.   In case of conflict of interest by the arbitrator, the information for the same may reach the stock exchange on which the dispute has taken place within 15 days of receipt of communication from the SE above. The said information may be sent by any method which ensures proof of delivery.

8.   Fees of arbitrator shall be dealt in line with existing provisions, by the stock exchange on which the dispute had taken place.

9.   The recognised stock exchanges with nation-wide trading terminals are advised to make necessary amendments to relevant bye-laws for the implementation of the above decision immediately.

10. SEBI inspection of stock exchanges shall cover implementation of this circular.

11. The circular is being issued in exercise of powers conferred upon SEBI under
Section 11(1) of the Securities and Exchange Board of India Act, 1992.

12. This   circular   is   being   issued   in   partial   modification   of   SEBI   Circular   No.
CIR/MRD/DSA/24/2010 dated August 11, 2010 and will come into effect from 1st
April 2013.

Yours faithfully,

Download SEBI CIRCULAR CIR/MIRSD/3/2013 for Sharing of information regarding issuer companies between Debenture Trustees and Credit Rating Agencies

SEBI CIRCULAR: Download SEBI  CIRCULAR CIR/MIRSD/3/2013 for Sharing   of   information   regarding   issuer   companies   between Debenture Trustees and Credit Rating Agencies

CIR/MIRSD/3/2013,March 15, 2013

To

All Debenture Trustees and Credit Rating Agencies registered with SEBI

Sir/ Madam,

Sub:   Sharing   of   information   regarding   issuer   companies   between Debenture Trustees and Credit Rating Agencies

1.  SEBI   (Debenture Trustee) Regulations,     1993 require the Debenture Trustees (DTs) to share information regarding the issuer companies that are their clients, with Credit Rating Agencies (CRAs). The purpose of the Regulations is to enable CRAs to perform their obligations effectively.

2.  DTs have also expressed the need to receive relevant information on issuer companies from CRAs.

3.  In consultation with DTs and CRAs, it has been decided that registered DTs and CRAs shall share information with each other as specified in the Annexure.  DTs and CRAs may share any other information from time to time in respect of issues/issuer companies which would help them in effective discharge of their duties.

4.  Further, the DTs and CRAs shall assign designated email addresses for sending and receiving such information and ensure appropriate action, if any, based on the information received.

5.  This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

6.  This circular is available on SEBI website under the categories “Legal Framework” and “Circulars”.

Yours faithfully,

Annexure

Sharing of information between Debenture Trustees (DTs) and Credit Rating Agencies (CRAs)

A. Information from CRAs to DTs

1.  Rating assigned/revised for debt securities along with the rationale for
the same.

2.  Press release, outstanding ratings etc. in respect of debt securities.

3.  Non-cooperation  by  the  issuers  with  respect  to  sharing  necessary information for monitoring the credit quality of the rated instrument with CRAs.

4.  Press release and separate communication to DT on withdrawal of rating post redemption of entire amount due towards debenture-holders.

5.  Default of any type committed by the issuer.

B. Information from DTs to CRAs

1.  Whether the asset in respect of which security has been created is free from any encumbrance and adequate to ensure  asset cover for the debentures or  if there is any breach of the terms of creation of the security. This information shall be shared on half yearly basis.

2.  Funds transferred to  Debenture Redemption Reserve(DRR), depletion of the DRR/invocation of guarantee which could affect the payment of debenture obligations. This information shall be shared annually.

3.  Details of redemption of the issue.

4.  Any default committed including the default in payment of interest or redemption of debentures or delay in creation of security.

5.  Any change or restructuring of the terms of the issue.

6.  Periodic reports from lead banks about the progress of the project for which funds have been raised through debentures and certificate from issuer’s auditors in respect of utilization of funds.

7.  Details of grievances filed by debenture-holders and action taken to resolve them.

8.  Non  cooperation  by  the  issuer  with  respect  to  furnishing  required reports/certificates/information. Information pertaining to points      3 to    8 shall be shared as and when available.

Download SEBI CIRCULAR CIR/MRD/DP/ 07 /2013 For Establishment of Connectivity with both depositories NSDL and CDSL

 Download SEBI CIRCULAR CIR/MRD/DP/ 07 /2013  For Establishment of Connectivity with both depositories NSDL and CDSL.   The stock exchanges may consider shifting the trading in these securities to normal Rolling Settlement.

1.    The  Cochin  Malabar  Estates  And  Industries            INE788M01017

2.    Wellesley Corporation Limited                                       INE176O01011

3.    Pawansut Holdings Limited                                           INE260M01017

4.    Comfort Fincap Limited                                                 INE274M01018

CIRCULAR

CIR/MRD/DP/ 07 /2013 , March 05, 2013

To, All Stock Exchanges

Dear Sir / Madam,

Sub:   Establishment of Connectivity with both depositories NSDL and CDSL – Companies eligible for shifting from Trade for Trade Settlement (TFTS) to Normal Rolling Settlement

1.      It is observed from the information provided by the depositories that the companies listed in Annexure ‘A’ have established connectivity with both the depositories.

2.      The stock exchanges may consider shifting the trading in these securities to normal Rolling Settlement subject to the following:

a)         At least 50% of other than promoter holdings as per clause 35 of Listing Agreement are in dematerialized mode before shifting the trading in the securities of the company from TFTS to normal Rolling Settlement. For this purpose, the listed companies shall obtain a certificate from its Registrar and Transfer Agent (RTA) and submit the same to the stock exchange/s. However, if an issuer-company does not have a separate RTA, it may obtain a certificate in this regard from a practicing company Secretary/Chartered Accountant and submit the same to the stock exchange/s.

b)         There are no other grounds/reasons for continuation of the trading in TFTS.

3.      The Stock Exchanges are advised to report to SEBI, the action taken in this regard in the Monthly/Quarterly Development Report.

Yours faithfully,

Annexure A

Sr. No.           Name of the Company                                      ISIN

1.    The  Cochin  Malabar  Estates  And  Industries            INE788M01017

2.    Wellesley Corporation Limited                                       INE176O01011

3.    Pawansut Holdings Limited                                           INE260M01017

4.    Comfort Fincap Limited                                                 INE274M01018

Download Circular CIR/CFD/DIL/6/2013 Guidelines for Enabling Partial Two-Way Fungibility of Indian Depository Receipts (IDRs)

Download Circular CIR/CFD/DIL/6/2013  Guidelines for Enabling Partial Two-Way Fungibility of Indian Depository Receipts (IDRs). All the IDRs shall have partial two-way fungibility. The partial two-way fungibility  means that  the  IDRs  can  be  converted  into  underlying  equity  shares  and  the  underlying equity Shares can be converted into IDRs within the available headroom.  The headroom for this purpose shall be the number of IDRs originally issued minus  the number of IDRs outstanding, which is further adjusted for IDRs redeemed into  underlying equity shares (“Headroom”).

CIR/CFD/DIL/6/2013, March 1, 2013

To ,All Stock Exchanges All Depositories, All Registered Merchant Bankers, All Registered Registrars to an Issue/STA All Registered Custodians

 Dear Sir/Madam,

 Sub: Guidelines for Enabling Partial Two-Way Fungibility of Indian Depository Receipts  (IDRs)

 1. Securities and Exchange Board  of   India (“SEBI”), vide circular No.CIR/CFD/DIL/10/2012 dated August 28, 2012, has prescribed the framework for redemption of IDRs into underlying equity shares. The circular has, inter alia, provided for partial fungibility of IDRs (i.e. redemption/conversion of IDRs into underlying equity shares) in a financial year to the extent of 25% of the IDRs originally issued. The Circular  also  stated  that  suitable  instructions  for  modifying  the  existing  legal framework governing IDRs, in order to implement the decision to allow redemption of IDRs into underlying equity shares and re-conversion of equity shares of a foreign issuer (which has already listed their IDRs) into IDRs, will be issued separately.

2.  In order to encourage more number of foreign companies to issue IDRs in the Indian market and also to enable the investors to take informed investment decision, it has been decided to provide a detailed roadmap and guidelines for the future IDR issuances as well as for the existing listed IDRs.

 3.  All the IDRs shall have partial two-way fungibility. The partial two-way fungibility  means that  the  IDRs  can  be  converted  into  underlying  equity  shares  and  the  underlying equity Shares can be converted into IDRs within the available headroom.  The headroom for this purpose shall be the number of IDRs originally issued minus  the number of IDRs outstanding, which is further adjusted for IDRs redeemed into  underlying equity shares (“Headroom”).

4.   The broad guidelines for fungibility of future IDR issuances and the existing listed IDRs are given below:

I.      Guidelines for fungibility of future IDR issuance

i.      IDRs shall not be redeemable into underlying equity shares before the expiry of one year period from the date of listing of IDRs.

ii.      After completion of one year period from the date of listing of IDRs, the issuer shall, provide two-way fungibility of IDRs.

iii.      IDR fungibility shall be provided on a continuous basis.

iv.      The issuer shall provide said fungibility to IDR holders in any of the following ways:

a.  converting IDRs into underlying shares; or

b.  converting IDRs into underlying shares and selling the underlying shares in the foreign market where the shares of the issuer are listed and providing the sale proceeds to the IDR holders; or

c.  both the above options may be provided to IDR holders.Provided that the option once exercised and disclosed by the issuer at the time of offering the IDRs to public cannot be changed without the specific approval of SEBI.

v.      All the IDRs that have been applied for fungibility by the holder shall be transferred to IDR redemption account at the time of application. The issuer shall take necessary steps to provide underlying shares or sale proceeds as per the choice made under sub-clause (iv) of this clause.

vi.      The Issuer may receive requests from the holders of underlying shares and convert these into IDRs subject to the Headroom available with respect to the number of IDRs originally issued subject to the guidelines prescribed by SEBI & Reserve Bank of India (“RBI”) from time to time.

vii.      In case of option of  converting the IDRs into underlying  equity shares and providing the sale proceeds to the IDR holders is exercised, the issuer shall disclose the range of fixed/variable costs in percentage terms upfront and ensure that all the costs together shall not exceed 5% of the sale proceeds.

viii.      Available Headroom and significant conversion/ reconversion transactions shall be disclosed by the issuer on a continuous basis.

ix.      The issuer shall lay down the detailed procedures while taking into consideration the above broad guidelines in addition to other norms specified by SEBI and RBI, from time to time.

II.      Guidelines for fungibility of existing listed IDRs

i.      After completion of one year period from the date of issue of IDRs, the issuer shall, every year provide redemption/conversion of IDRs into underlying equity shares of the issuer of up to 25% of the IDRs originally issued. The Issuer shall invite expression of interest from IDR holders by  giving advertisements in leading English and Hindi national daily newspapers with wide circulation as well as notification to the stock exchanges giving the operating guidelines for redemption/ conversion of IDRs at least one month before the implementation.

ii.      The issuer shall exercise the option specified in sub-clause (iii) below provided that the same is disclosed in accordance with sub-clause (xii) of this clause.

iii.      The mode of fungibility: The issuer shall provide the said fungibility to IDR holders in any of the following ways:

a.  converting IDRs into underlying shares; or

b.  converting IDRs into underlying shares and selling the underlying shares in the foreign market where the shares of the Issuer are listed and providing the sale proceeds to the IDR holders; or

c.  both the above options may be provided to IDR holders.

iv.      The periodicity for IDR fungibility shall be at least once every quarter. The fungibility window shall remain open for the period of at least seven days.Provided that the option once exercised and disclosed by the issuer to public cannot be changed without the specific approval of SEBI. However, the issuer may decide to exercise the option provided in sub-clause (xiii) below without specific approval from SEBI.

v.  Total number of IDRs available for fungibility during one fungibility window shall be fixed before the opening of the window. Re-issuances of IDRs during the fungibility window, if any, shall be considered for computation of Headroom only at the time of next cycle of fungibility. Fungibility window for this purpose shall mean the time period during which IDR holders can apply for conversion of IDRs into underlying equity shares.

vi.      In case of requests for conversion in excess of the limit available, the manner of accepting IDRs for conversion/ redemption or shares for re-issuance shall be on proportionate basis.

vii.      A reservation of 20% of the IDRs made available for redemption/conversion into underlying equity shares in the fungibility window shall be provided to Retail Investors. Within this reserved window: in case of higher demand for fungibility, the demand shall be satisfied on proportionate basis. Further, the excess unsatisfied demand from the retail investors shall be included in the unreserved portion. in case of lower demand for fungibility from retail investors, the unallocated portion shall be added to the unreserved portion.

viii.      All the IDRs applied for fungibility shall be transferred to IDR redemption account at the time of application and in case of unsuccessful bids the balance IDRs shall be transferred back to the account of applicant. The issuer shall take necessary steps to provide underlying shares or cash as per the choice made under subclause (iii) above.

ix.      The Issuer may receive requests from the holders of underlying shares and convert these into IDRs subject to the Headroom available with respect to the number of IDRs originally issued subject to the guidelines prescribed by RBI from time to time.

x.      In case of option of converting IDRs into underlying shares and providing the sale proceeds to the IDR holders, the issuer shall disclose the range of fixed/variable costs in percentage terms upfront and all the cost together shall not exceed 5% of the sale proceeds

xi.      Available Headroom and significant conversion/ reconversion transactions shall be disclosed by the issuer on a continuous basis.

xii.      Existing issuers shall provide the option of redemption/ conversation within three months of notification of these guidelines.

xiii.      The existing issuer of IDR may exercise the option of using the guidelines available for the new issuers as referred above from the anniversary of the date of listing of their IDRs after the issuance of this circular or from any of the subsequent quarters thereafter.  For this purpose, the issuer shall disclose the exercising of the said option by giving advertisements in leading English and Hindi national daily newspapers with wide circulation as well as notification to the stock exchanges giving the operating guidelines for redemption/ conversion of IDRs at least one month before exercising the option. The said option, once exercised, cannot be reversed.

xiv.      The issuer shall lay down the detailed procedures while taking into consideration the above broad guidelines in addition to other norms specified by SEBI and RBI, from time to time.

5.  With issuance of this circular, SEBI circular No: CIR/CFD/DIL/10/2012 dated August 28, 2012 shall become effective and SEBI circular No: CIR/CFD/DIL/3/2011 dated June 03, 2011 would stand rescinded.

6.  This circular is issued in exercise of the powers conferred under Section 11 of the Securities and Exchange Board of India Act, 1992 read with Regulation 100 of the
Securities  and  Exchange  Board  of  India (Issue   of   Capital   and Disclosure Requirements) Regulations, 2009.

 7.  This circular is available on SEBI website at www.sebi.gov.in under the category     “Legal Framework”.

 Yours faithfully,

Download SEBI CIRCULAR CIR/IMD/DF/04/2013 for Gold Exchange Traded Fund Scheme (Gold ETFs) Investment in Gold Deposit Scheme (GDS) of Banks

CIRCULAR

Download SEBI CIRCULAR  CIR/IMD/DF/04/2013 for Gold Exchange Traded Fund Scheme (Gold ETFs) Investment in Gold Deposit Scheme (GDS) of Banks

All Mutual Funds/Asset Management Companies (AMCs)/ Trustee Companies/Boards of Trustees of Mutual Funds/ All Depositories

Sir/ Madam,

Sub: Gold Exchange Traded Fund Scheme (Gold ETFs) Investment in Gold Deposit Scheme (GDS) of Banks

February 15, 2013

1.   SEBI (Mutual Funds) Regulations, 1996, (MF Regulations)  permits Gold Exchange

Traded Fund scheme (Gold ETFs) to invest primarily in:

a) Gold

b) Gold related instruments – Regulation 2(mc) of MF Regulations stipulates that
gold related instruments are such instruments having gold as underlying, as
are specified by SEBI from time to time.

Please  also  refer  to  SEBI  circular  no.  SEBI/IMD/CIR  No.4/58422/2006  dated January 24, 2006, issued in this regard.

 

2.   It has now been decided to designate Gold Deposit Scheme (GDS) of banks as one

such gold related instrument. Investment in GDS of banks by Gold ETFs of mutual funds will be subject to following conditions:

a.  The  total Investment  in  GDS  will  not  exceed       20%  of  total asset  under

management of such schemes.

b.  Before investing in GDS of banks, mutual funds shall put in place a written
policy with regard to investment in GDS with due approval from the Board of
the Asset Management Company and the Trustees. The policy should have
provision to make it necessary for the mutual funds to obtain prior approval of

 

 

their trustees for each investment proposal in GDS of any Bank. The policy shall be reviewed by mutual funds, at least once a year.

c.  Gold certificates issued by Banks in respect of investments made by Gold
ETFs in GDS shall be held by the mutual funds only in dematerialized form.

3.  This circular is issued in exercise of the powers conferred under Section 11 (1) of
the Securities and Exchange Board of India Act 1992, read with the provision of
Regulation 77 of SEBI (Mutual Funds) Regulation, 1996 to protect the interests of
investors in securities and to promote the development of, and to regulate the
securities market

Yours faithfully,

PARAG BASU

General Manager

Tel no.: 022-26449360
Email: paragb@sebi.gov.in

 

Download CIRCULAR CIR/MRD/DP/ 6/2013 for Introduction of Periodic Call Auction for Illiquid Scrips and Extension of Pre-open Session to all Scrips.

SEBI CIRCULAR: Download  CIRCULAR  CIR/MRD/DP/ 6/2013  for Introduction of Periodic Call Auction for Illiquid Scrips and Extension of Pre-open Session to all Scrips.

CIR/MRD/DP/ 6/2013,   February 14, 2013

To, All Stock Exchanges

Dear Sir/Madam,

Sub: Introduction of Periodic Call Auction for Illiquid Scrips and Extension of Pre-open Session to all Scrips.

1. SEBI vide circular no CIR/MRD/DP/21/2010 dated July 15, 2010 introduced Call Auction in Pre-open session on pilot basis at NSE and BSE for scrips forming part of Nifty and Sensex. Vide circular CIR/MRD/DP/ 01/2012 dated January 20, 2012, the framework of call auction was extended to IPO scrips and re-listed scrips. The issue of extending call auction mechanism in pre-open session to all scrips was deliberated in Secondary Market Advisory Committee (SMAC). SMAC also made recommendation on introduction of trading through periodic call auction mechanism for illiquid scrips in the equity market. Accordingly, it has been decided to implement following:

1.1. Introduce trading through periodic call auction for illiquid scrips in equity market

1.2. Extend the pre-open session to all other scrips in the equity market

 2. Periodic Call Auction for Illiquid scrips

 2.1.   Trading in illiquid scrips in the equity market shall be conducted only through            periodic call auction sessions.

2.2.   Criteria for illiquidity – For the purpose of this circular, a scrip, whether trading in normal market or trade for trade settlement, shall be classified as illiquid on a stock exchange if all the following conditions are met:

2.2.1. The average daily trading volume of a scrip in a quarter is less than 10000;

2.2.2. The average daily number of trades is less than 50 in a quarter;

2.2.3. The scrip is classified as illiquid at all exchanges where it is traded.

 2.3.    Entry into periodic call auction mechanism – Stock exchanges shall identify illiquid scrips at the beginning of every quarter and move such scrips to periodic call auction mechanism.

2.4.    Exit from periodic call auction mechanism – Stock exchanges shall move scrips from periodic call auction mechanism to normal trading session if the following criteria are met:

2.4.1. The scrip has remained in periodic call auction for at least two quarters

2.4.2. It is not classified as illiquid as per para 2.2

2.5.    Notice to market – For entry and exit of scrips in the call auction mechanism, a notice of two trading days shall be given to the market.

2.6.    Number of auction sessions – Periodic call auction sessions of one hour each shall be conducted throughout the trading hours with the first session starting at 9:30am.

2.7.    Session duration – The call auction session duration shall be one hour, of which 45 minutes shall be allowed for order entry, order modification and order cancellation, 8 minutes shall be for order matching and trade confirmation and remaining 7 minutes shall be a buffer period for closing the current session and facilitating the transition to next session. The session shall close randomly during last one minute of order entry between the 44th & 45th minute. Such random closure shall be system driven.

2.8.    Un-matched orders- All un-matched orders remaining at the end of a call auction session shall be purged.

2.9.    Price band – A maximum price band of 20% shall be applicable on the scrips through the day. Exchanges may reduce the price bands uniformly based on surveillance related concerns.

2.10. If the Market wide Index Circuit Breaker gets triggered at any time during the periodic call auction session, the session shall be cancelled and all orders shall be purged. The periodic call auction session shall be resumed at the  nearest half hour after the normal market resumes.

2.11. Penalty for certain trades – In the event where maximum of buy price entered by a client (on PAN basis) is equal to or higher than the minimum sell price entered by that client and if the same results into trades, a penalty shall be imposed on such trades. The penalty shall be calculated and charged by the exchange and collected from trading members on a daily basis. Trading members may recover such penalty from clients. The penalty so collected shall be deposited to Investor Protection Fund. Penalty for each such instance per session will be higher of the following:

a.   0.50% of the trade value for sale and 0.50% of trade value for the buy, resulting in 1% penalty for the client on PAN basis. OR

b.   2500 /- for the buy trade and 2500 /- for the sell trade, resulting in penalty of 5000/- for the client on PAN Basis.

2.12. All other conditions for trading in periodic call auction sessions shall be as per the circulars CIR/MRD/DP/21/2010 dated July15, 2010, CIR/MRD/DP/27/2010 dated August 27, 2010 and CIR/MRD/DP/32/2010 September 17, 2010.

3. Pre-Open Call Auction Session

3.1. In partial modification of SEBI circular no CIR/MRD/DP/21/2010 dated July 15, 2010, pre-open call auction session shall be applicable to all exchanges with active trading and for all scrips that are not classified as illiquid as per para 2.2 above.

3.2. Price bands in pre-open session shall be as applicable in the normal market.

3.3. All orders shall be checked for margin sufficiency at order level for inclusion in pre-open session.

3.4. All other conditions for pre-open call auction session shall be as per circulars CIR/MRD/DP/21/2010 dated July15, 2010, CIR/MRD/DP/27/2010 dated August 27, 2010 and CIR/MRD/DP/32/2010 September 17, 2010.

4. The provisions of this circular shall be effective from April 01, 2013.

5. Stock Exchanges are directed to:

5.1. take necessary steps and put in place necessary systems for implementation of
this circular;

5.2. make necessary amendments to the relevant bye-laws, rules and regulations for
the implementation of the above decision;

5.3. bring the provisions of this circular to the notice of the member brokers of the stock exchange and also to disseminate the same on the website.

6. This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

Yours faithfully,