The Securities and Exchange Board of India (Sebi) on Wednesday allowed systemically important non-banking financial companies (NBFCs) to be categorised as qualified institutional buyers, a unified licence for brokers in commodities and equity markets, among other things. At present, banks and insurance companies are categorised as qualified institutional buyers (QIBs) by Sebi. Finance minister Arun Jaitley in his Budget speech had proposed to allow systemically important NBFCs regulated by the RBI and above a certain net worth, to be categorised as QIBs since it would strengthen the IPO market and channelise more investments.
This was the first board meeting of Sebi after Ajay Tyagi took over as chairman in March.
The regulator also made it mandatory for appointment of a monitoring agency in IPO issues of more than `100 crore. Moreover, the frequency of submission of monitoring agencies’s report has been enhanced from half-yearly to quarterly.The monitoring agencies report has to be displayed on the company’s website apart from submitting it to exchanges.
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The markets regulator also granted some relief to banks with regards to the lock-in period and the eligibility criteria for preferential share allotments. Sebi has proposed to exempt scheduled banks and financial institutions under the issue of capital and disclosure requirements. Earlier, companies could not make preferential allotment of shares to any entity which has sold their shares during the six months preceding the issue date. This criteria has been relaxed.
Further, Sebi decided to bar non-resident Indians from making investments through Participatory Notes.
It also approved the proposal to amend stock brokers regulation so that it can integrate stock brokers in equity and commodity derivative markets. This will allow the same entity to operate in both the markets.
‘NSE IPO may take some time’
The Sebi chairman further said the IPO of NSE will take time. Sebi has decided to clear the issue only after the issue of co-location and high frequency trading involving the exchange is sorted.
NSE, India’s biggest exchange, filed an application in late December for an IPO that bankers have estimated could raise as much as $1 billion, but SEBI has yet to give its approval.