The Securities and Exchange Board of India (Sebi) on Wednesday agreed to consider the application of National Securities Depository Ltd (NSDL) to work as a record-keeping agency for pension funds.
Sources said that the proposal to allow NSDL to carry out activities other than its core activity of carrying out depositiry related work will be subject to a ?lot of conditionalities.?
The first condition put forward by Sebi is to carry out such activities by NSDL by establishing it as a strategic business unit (SBU).
The setting up of SBU will need to have approval from NSDL board and its sponsors. The board and sponsors will not only approve the activity of NSDL to act as record-keeping agency for pension funds but also for other activities that it wishes to take up, sources said.
Sebi has also put a condition that other activities NSDL wish to undertake should not erode the networth required for carrying on depository related activities in securities.
The new activities will have to be hived off within three years of operation to a separate entity without financial and legal link with NSDL.
Till then, NSDL will have to ensure financial integrity for all the activities carried out by it other than the depository related work, sources added.
It is also believed that Sebi has asked NSDL to go for additional insurance cover for risks, if any, for carrying out business of other activities and maintain the seggragation of technological and other matters.
In yet another investor-freindly decision, Sebi has also decided to continue with the reverse book building process in case of delisting of securities from the stock exchanges (SEs). This is in contrast with alternative pricing method suggested through a concept paper floated by Sebi in November 2006.
The alternative pricing suggested that the delisting price can be 25% higher than the ?fixed price?, which could be the floor price.
Along with this, Sebi board, which met in Mumbai also approved the proposal to come out with draft regulations for investment advisors and self regulatory organisations (SROs).
Sebi sources said that the regulator will soon put these draft regulations on its website and public comments will be invited before finalising them.