1. Sebi to take steps to deepen bond market, improve corp governance bonds

Sebi to take steps to deepen bond market, improve corp governance bonds

Sebi chairman Ajay Tyagi says the regulator is working with RBI for developing a repo market in corporate bonds. Among other steps, a common investment framework is being prepared for mutual funds, insurance companies and pension funds in bonds.

By: | New Delhi | Published: April 29, 2017 4:09 AM
With Indian corporate bond market currently at a bright spot, having overtaken bank credit in recent times, Tyagi said the regulator is working with RBI for developing a repo market in corporate bonds.

Market regulator Sebi plans to take a slew of steps in the coming months to further deepen bond market, improve corporate governance and ease procedures, its chairman Ajay Tyagi said on Friday. With Indian corporate bond market currently at a bright spot, having overtaken bank credit in recent times, Tyagi said the regulator is working with RBI for developing a repo market in corporate bonds.

He said fund raising through capital market was Rs 7.8 lakh core in the last financial year. Among other steps, a common investment framework is being prepared for mutual funds, insurance companies and pension funds in bonds. Expressing concern over falling standards of corporate governance, Tyagi said: “(in many companies) auditors committee is not working, independent directors are not independent and there is no stewardship code… then definitely there are serious issues.” “This a serious issue which is engaging the attention of Sebi. We will come out with more discussion soon,” he said at an event organised by CII here.

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The comments assume importance in the context of recent boardroom controversies at Tata group and Infosys. On auditors, Tyagi said that the system of self-regulation is not working and Sebi would soon discuss the matter before taking further action. To simplify overlapping regulations, Sebi is considering to appoint an external agency to suggest simplification of takeover code, buyback code and delisting code. It is also looking at bringing a new common stewardship code for institutional investors. Since most institutions remain passive, promoters prefer to have such institutions on the board of companies, he added.

NSE IPO will take more time
The initial public offering (IPO) of the National Stock Exchange (NSE) will take a few more months as co-location issues involving the exchange are yet to be sorted out, the Securities and Exchange Board of India (Sebi) chief Ajay Tyagi said on Friday. Separately, he said, Sebi will likely take a view on action against certain brokers for their alleged involvement in the Rs 5,600-crore National Spot Exchange (NSEL) scam in a month.

NSE, which filed its draft prospectus with Sebi in December to raise around Rs 10,000 crore via IPO, is awaiting the regulator’s nod. “They (NSE) themselves have come to conclusion and rightly so that the co-location issue needs to be sorted out before they go for the IPO. It is not happening immediately,” Tyagi said on the sidelines of a CII event here.

Co-location refers to brokers locating their servers on the premises of the exchange to get speed advantage in transactions over those who are far away from the premises. NSE is facing regulatory scrutiny for allegedly providing preferential access to co-location facilities to a select few. A Sebi-appointed committee has found instances of breach of fair access norms by the exchange.

On the NSEL scam case, Tyagi said, as per the procedure a whole-time member has issued notice to five brokers and a view will be taken soon on action against them. The regulator is probing five commodity brokers including Anand Rathi Commodities, Motilal Oswal Commodities Brokers and India Infoline Commodities in the NSEL case. Multiple agencies including Sebi are probing the irregularities that happened at the now-defunct NSEL. The fraud at the NSEL prompted government to merge the Forward Markets Commission with Sebi to improve regulatory oversight.

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