Karvy episode: Rules soon to curb misuse of client shares, says Sebi

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Published: February 18, 2020 5:15:19 AM

Tyagi told reporters after a board meeting Karvy had indicated to the National Stock Exchange it would pay the shortfall of Rs 678 crore by March from the proceeds of a stake sale in a company.

The Sebi board on Monday approved tighter eligibility norms for investment advisers segregating advisory and distribution activity at the client level.The Sebi board on Monday approved tighter eligibility norms for investment advisers segregating advisory and distribution activity at the client level.

Securities and Exchange Board of India (Sebi) chairman Ajay Tyagi said on Monday the Board would soon come out with a circular to prevent incidents like the one at Karvy Stock Broking Ltd (KSBL), where there had been an alleged misuse of securities belonging to clients.

Tyagi told reporters after a board meeting Karvy had indicated to the National Stock Exchange it would pay the shortfall of Rs 678 crore by March from the proceeds of a stake sale in a company. “We will wait and see,” Tyagi said.

The Sebi board on Monday approved tighter eligibility norms for investment advisers segregating advisory and distribution activity at the client level. Individual advisers can no longer provide distribution services while their fees have been capped. Those distributing securities would not be allowed to use the nomenclature “Independent Financial Adviser (IFA)” or “Wealth Adviser” or any other similar name, unless registered with SEBI as an investment adviser. With a view to bringing in transparency, the capital markets watchdog mandated that an agreement be signed between an adviser and the client spelling out the terms and conditions.

The regulator also approved a ‘regulatory sandbox’ for all SEBI-registered entities to facilitate the use of Fintech applications innovations in the capital market. The process allows for live testing of new products, services and business models by market players on select customers.

The SEBI board also decided to amend its investment manager eligibility norms for Infrastructure Investment Trusts and to permit fast-track issuance of units to existing investors in REITs and InvITs.

(With agency inputs)

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