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SEBI is investigating six investment banks for charging inflated fees and using fake bids to boost small business IPOs. The banks allegedly charged up to 15%, much higher than the norm, with SEBI aiming to curb unfair market practices.

SEBI Probes Six Banks for Exorbitant Fees in Small Business IPOs: Report

SEBI is investigating six investment banks for charging inflated fees and using fake bids to boost small business IPOs. The banks allegedly charged up to 15%, much higher than the norm, with SEBI aiming to curb unfair market practices.

In a significant development for India's booming IPO market, SEBI (Securities and Exchange Board of India) has launched an investigation into six domestic investment banks over inflated fees and suspicious bidding practices in small business IPOs.&nbsp;
According to a Reuters report, these probes began earlier this year, focusing on fees that reached as high as 15% of the funds raised through IPOs&mdash;a sharp contrast to the usual 1-3% range typically charged in India.
The investigation covers banks involved in IPOs for smaller companies with annual turnovers between ₹50 million and ₹2.5 billion. These businesses list on separate platforms of the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE), which are subject to fewer regulatory disclosures.&nbsp;
SEBI&rsquo;s early findings suggest that the unusually high fees might be linked to efforts to artificially boost IPO subscriptions.
Sources indicate that certain banks and investors are engaging in coordinated activities where they place large, non-genuine bids to create the impression of high demand. These bids, often made by high net-worth individuals and regular retail investors, are later canceled, but the inflated subscription figures attract more genuine interest from other investors.
SEBI is now stepping in to curb these manipulative practices that threaten the integrity of India&rsquo;s rapidly expanding small business IPO market. With over 60 investment banks involved in small IPOs, this investigation could lead to stricter regulations and a shake-up in the way small businesses access capital through the market.
As SEBI intensifies its crackdown, this probe could have far-reaching consequences on how India&rsquo;s small businesses raise funds and on the transparency of its IPO market.

SEBI’s shocking report reveals 91% of F&O traders lost money last year, with 73 lakh traders suffering losses totaling ₹75,000 crore. Average loss per trader was ₹1.2 lakh, while the top 3.5% lost ₹28 lakh each. Beware of the risks!

SEBI Bombshell: F&O Traders Lose ₹75,000 Crore in Single Year

SEBI&rsquo;s shocking report reveals 91% of F&amp;O traders lost money last year, with 73 lakh traders suffering losses totaling ₹75,000 crore. Average loss per trader was ₹1.2 lakh, while the top 3.5% lost ₹28 lakh each. Beware of the risks!

More than 91 per cent, or 73 lakh, individual traders lost money in the Futures &amp; Option (F&amp;O) segment in FY24 with an average net loss of Rs 1.2 lakh per person, a study conducted by markets regulator Sebi revealed on Monday.
Further, 93 per cent of over 1 crore individual F&amp;O traders incurred average losses of about Rs 2 lakh per trader (inclusive of transaction costs) during the three years from FY22 to FY24. The aggregate losses of such traders exceeded Rs 1.8 lakh crore during the period.
In FY24 alone, individuals incurred about Rs 75,000 crore in net losses, it added.
The Sebi study found the top 3.5 per cent of loss makers -- about 4 lakh traders -- faced an average loss of Rs 28 lakh per person over the same period, inclusive of transaction costs.
On the other hand, only 7.2 per cent of individual F&amp;O traders made a profit over the period of three years and only 1 per cent of individual traders managed to earn profits exceeding Rs 1 lakh, after adjusting for transaction costs.
Moreover, the number of retail traders, or individual traders, has almost doubled in two years to about 96 lakh in FY24 from about 51 lakh in FY22.
Although such investors contributed about 30 per cent in the total turnover in FY24, they are a clear majority in number terms, as 99.8 per cent of total traders in the equity F&amp;O segment are individuals.
"The availability of sophisticated trading platforms and lower transaction costs have enabled retail investors to actively trade in options and futures contracts, contributing to the surge in market liquidity," Sebi said.
The regulator said rapid growth in F&amp;O trading activity has highlighted the need for investor education and risk management practices, as a significant proportion of retail traders continued to incur losses in the market.
This study follows up on a report published by Sebi in January 2023, which found that 89 per cent of individual equity F&amp;O traders lost money in FY22.
With increased participation of individual investors in equity and equity derivatives markets, the current study was undertaken to analyse profit and loss patterns for individual traders in F&amp;O during FY22 to FY24, and for all the categories of investors in F&amp;O during FY24 alone.
While individuals made losses in F&amp;O, the FPIs and proprietary traders earned profits. The proprietary traders earned about Rs 33,000 crore of gross profits in F&amp;O segment in FY24, followed by FPIs who earned about Rs 28,000 crore in gross profits. Against this, individuals and others incurred losses of over Rs 61,000 crore in FY24 (before accounting for transaction costs).
In terms of demography, the proportion of young traders -- less than 30 years of age -- has significantly increased trading in the segment to 43 per cent in FY24 from 31 per cent in FY23.
Nearly 93 per cent of these young traders incurred losses in F&amp;O in FY24, higher than the average lossmakers of 91.1 per cent in FY24.
Over 75 per cent of individual F&amp;O traders (65.4 lakh traders) in FY24 had declared annual income of less than Rs 5 lakh. The proportion of low-income traders (annual income less Rs 5 lakh) has increased from 71 per cent in FY22 to 76 per cent in FY24.
The proportion of female traders participating in F&amp;O has decreased from 14.9 per cent in FY22 to 13.7 per cent in FY24. Compared to male traders, less proportion of female traders incurred losses.
While 91.9 per cent of male traders incurred losses in FY24, 86.3 per cent percentage of female traders made losses in F&amp;O.
In terms of geography, individuals from Beyond Top 30 (B30) cities made up over 72 per cent of the total F&amp;O trader base in FY24, a higher proportion compared to mutual fund investors, 62 per cent of whom are from B30 cities.
On an average, individual traders spent Rs 26,000 per person on F&amp;O transaction costs in FY24 and over the three-year period from FY22 to FY24, individuals collectively spent about Rs 50,000 crore on transaction costs, with 51 per cent of these costs being brokerage fees and 20 per cent being exchange fees.&nbsp;

Additionally, Reliance Home Finance has been banned from the securities market for six months, with a fine of 6 lakh rupees

SEBI bars Anil Ambani and 24 entities from securities market for 5 years

Additionally, Reliance Home Finance has been banned from the securities market for six months, with a fine of 6 lakh rupees

In a major crackdown, capital markets regulator SEBI has banned industrialist Anil Ambani and 24 other entities, including former top officials of Reliance Home Finance, from the securities market for five years. The action comes in response to the alleged misdirection of company funds. SEBI has slapped a hefty 25 crore rupees penalty on Anil Ambani and restrained him from taking on roles as a director or Key Managerial Personnel in any listed company or registered intermediary for the next five years. Additionally, Reliance Home Finance has been banned from the securities market for six months, with a fine of 6 lakh rupees. ADAG stocks including Reliance Power saw deep cuts on the back of this development.

SEBI mandates brokers to establish systems to detect and prevent market abuse, report suspicious activities promptly, and implement whistleblower policies. The regulations, effective June 27, also tighten controls on mule accounts

SEBI mandates stock brokers to implement systems to prevent market abuse

<h2>SEBI mandates brokers to establish systems to detect and prevent market abuse, report suspicious activities promptly, and implement whistleblower policies. The regulations, effective June 27, also tighten controls on mule accounts</h2>

The Securities and Exchange Board of India (SEBI) has established a new institutional mechanism requiring stock brokers to implement systems for detecting and preventing market abuse. Previously, there were no specific regulatory provisions mandating brokers to have such preventive systems.
<h3>Preventive Systems</h3>
Under this new framework, both broking firms and their senior management are now accountable for identifying and preventing fraud or market abuse. They are required to establish robust surveillance and control systems, along with appropriate escalation and reporting mechanisms.
SEBI has outlined various instances of potential market abuse that brokers' systems must be capable of monitoring. These include creating a misleading appearance of trading, price manipulation, front running, pump and dump schemes, insider trading, mis-selling, unauthorized trading, and facilitating mule accounts. Brokers must report any detected suspicious activity to the stock exchanges within 48 hours of detection.
Additionally, brokers are required to submit a summary analysis and action taken report on suspicious activities, fraud, and market abuse on a half-yearly basis. This report must be submitted even if no such instances are detected, in the form of a 'nil report'.
Deviations in adherence to internal controls, risk management policies, surveillance policies, and client onboarding procedures must be reported to the appropriate committee or board of directors. These deviations should also be included in the half-yearly report to the stock exchanges.
SEBI mandates that stock brokers establish and implement a whistleblower policy, providing a confidential channel for employees and stakeholders to report suspected fraudulent or unethical practices. The policy must ensure adequate protection for whistleblowers.
The regulator has also tightened rules to curb trading through mule accounts, which are trading accounts controlled by another person. Transactions through mule accounts for manipulative or fraudulent practices are deemed to fall under the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) norms.
These amendments to the stock brokers and PFUTP rules became effective on June 27.
Also watch: <a href="https://www.editorji.com/business-news/personal-finance/sebi-regulates-finfluencers-bars-regulated-entities-from-associating-with-unregistered-finfluencers-1719551210955">SEBI regulates Finfluencers; bars regulated entities from associating with unregistered Finfluencers</a>

SEBI's new norms prohibit live data sharing with virtual trading platforms, leading to startups like Trinkerr and Investro pausing operations. The regulations aim to curb illegal data use and stock market gamification

Amid SEBI's new norms on sharing live market data, many stocks gaming apps quit operations

<h2>SEBI's new norms prohibit live data sharing with virtual trading platforms, leading to startups like Trinkerr and Investro pausing operations. The regulations aim to curb illegal data use and stock market gamification</h2>

Indian market regulator SEBI on June 24, announced new norms for exchanges and market intermediaries like brokers prohibiting them from giving "live" data to third party platforms offering virtual trading, a thrilling fantasy game or an educational course. Following this, nearly half a dozen startups that are built around stock gaming are either shutting shop, pausing operations or considering a pivot, reported Moneycontrol.
Meanwhile, the firms that have planned to use dated data are struggling to retain young customers as the adrenaline of live gaming and simulation for either leisure or learning fades away.
<h3>Stock gaming apps shut down</h3>
As per Moneycontrol, Accel and Kunal Shah-backed Trinkerr has paused its gaming product to contemplate the next course of action. Similarly, Dream Sports-backed fantasy stock app &mdash; Investro &mdash;has been discontinued and is taking withdrawal requests.
&ldquo;The broader implications of these regulations seem aimed at curbing illegal data use, and gamification of the stock market. While we support measures to protect investors, an outright restriction on data utilisation might inadvertently restrict access to valuable educational resources that platforms like ours provide,&rdquo; Trinkerr co-founder Manvendra Singh told Moneycontrol.
Trinkerr has clarified that it has been using data with a five-minute delay and that it has never been a pure gaming app but is also focused on educational aspect.&nbsp;
"Delayed data, especially with the variability of expiry dates in F&amp;O trading, can lead to confusion and detract from the educational experience by introducing inaccuracies in the market conditions that our users study," Manvendra Singh told Moneycontrol.
The Moneycontrol report further added that in the last two years, many stock gaming shops have closed shops unable to make a strong case for stock gaming.&nbsp;
&ldquo;Changes have been ongoing since the past few years now. We foresaw this circular last year itself and pivoted our business model to other markets,&rdquo; Shubham Rawal, co-founder and CEO, StockPe, a gamified stock market app told Moneycontrol.
<h3>SEBI's order</h3>
SEBI's crackdown comes amid heightened interest of retail investors, especially in future and options (F&amp;O) besides fear of a growing parallel space outside its purview. Moneycontrol quoted Sanjam Arora, Partner at Trilegal and said that SEBI is concerned about social trading apps potentially bordering on gambling, though some argue they should be seen as skill-based games.
&ldquo;SEBI is concerned that these apps do not afford users the protections ordinarily available to investors in the securities market. There are also apprehensions that 'gamifying' the trading experience could seed high-risk behaviours among users, which may spill over into trading behaviours in the real world,&rdquo; she told Moneycontrol.
Also watch: <a href="https://www.editorji.com/business-news/personal-finance/sebi-regulates-finfluencers-bars-regulated-entities-from-associating-with-unregistered-finfluencers-1719551210955">SEBI regulates Finfluencers; bars regulated entities from associating with unregistered Finfluencers</a>

SEBI's investigation into Quant Mutual Fund over front-running allegations has raised investor concerns. Pankaj Mathpal advises calmness, emphasizing that the probe is preliminary and that Quant's liquidity ensures minimal impact on fund performance

Invest Smart: SEBI's probe into Quant Mutual Funds explained; here's what investors should do

<h2>SEBI's investigation into Quant Mutual Fund over front-running allegations has raised investor concerns. Pankaj Mathpal advises calmness, emphasizing that the probe is preliminary and that Quant's liquidity ensures minimal impact on fund performance</h2>

The Securities and Exchange Board of India (SEBI) has initiated an investigation into Quant Mutual Fund, one of the country's fastest-growing asset management companies, for suspected front-running. The probe has raised concerns among investors about the potential impact on their investments.
In an exclusive interview on Invest Smart, Pankaj Mathpal, MD &amp; CEO, Optima Money Managers explains what front-running is and also talks about what investors of Quant MF should do amid the ongoing investigation.&nbsp;
<h3>Quant Mutual Fund case</h3>
Pankaj Mathpal emphasized that the investigation is still in its early stages, and no conclusions have been drawn yet. "SEBI suspects front-running but has not confirmed any wrongdoing by Quant Mutual Fund. It's important for investors to remain calm and not make hasty decisions based on unverified information," he advised.
He also said that SEBI will take appropriate action against those responsible. "If front-running is confirmed, SEBI will take appropriate action against the responsible individuals.
On the potential impact on the AMC&rsquo;s funds, Mathpal says that the performance of mutual fund schemes largely depends on the underlying stocks. If these stocks continue to perform well, the overall impact on the fund's returns should be minimal," Mathpal reassured.
<h3>Impact on investors</h3>
He also highlighted the importance of liquidity in Quant Mutual Fund's portfolios. "Even in small-cap funds, there is a significant allocation to large-cap stocks, ensuring good liquidity. This means the fund can handle redemption pressures without severely impacting its performance," he noted.
Reflecting on past incidents, such as the probe into Axis Mutual Fund, Mathpal stressed that SEBI is a vigilant regulator that takes swift action to protect investors. "Trust in the regulatory system and the fund house is crucial. Isolated incidents should not erode overall confidence in the mutual fund industry," he asserted.
In conclusion, Mathpal urged investors to stay invested and not succumb to panic. "Quant Mutual Fund has delivered extraordinary returns in the past. Investors should trust the process and allow the investigation to unfold. Making rash decisions now could lead to unnecessary losses," he said.
Also watch: <a href="https://www.editorji.com/business-news/invest-smart/invest-smart-advice-for-investors-after-sebi-red-flags-froth-in-small-midcap-funds-1709900576341">Invest Smart: Advice for investors after SEBI red-flags froth in small, midcap funds</a>
&nbsp;

SEBI has written to enable fractional ownership of shares, allowing investors to purchase portions of high-priced stocks, similar to real estate REITs. Changes in Companies Act is required to enable the fractional ownership facility

SEBI writes to government to allow fractional ownership of shares

<h2>SEBI has written to enable fractional ownership of shares, allowing investors to purchase portions of high-priced stocks, similar to real estate REITs. Changes in Companies Act is required to enable the fractional ownership facility</h2>

The Indian market regulator SEBI has written to the government to allow fractional ownership of shares in the domestic equity market. This comes as, changes in the Companies Act is required to enable the fractional ownership facility.
<h3>Fractional ownership of shares</h3>
SEBI chairperson Madhabi Puri Buch said on Thursday that the capital market watchdog has already written to the relevant ministry to look into the matter and see if the necessary changes in the legislation can be done.
&ldquo;Since the Companies Act is under deliberation, we have requested the ministry, so let&rsquo;s see what comes out,&rdquo; said SEBI chairperson Madhabi Puri Buch while speaking to the media on Thursday after the board meeting.
In fractional ownership, an investor can buy or sell a fraction of the shares as well. This feature is already available in some of the markets globally including the US. As per Moneycontrol, since the pandemic year of 2020, an increasing number of Indian retail investors have been buying shares of companies listed on the US bourses and given the high prices in absolute rupee terms, many prefer to buy in fractions rather than one share.
Since Fractional Ownership allows investors to buy a portion of the share, they will be able to afford high valued stocks such as MRF (Rs 1.25 lakh), Kaycee Industries (Rs 60,628), The Yamuna Syndicate (Rs 60,300), Honeywell Automation India (Rs 57,052.05), and Page Industries (Rs 40,059).
The concept of Fractional Ownership is already seen in sectors like real estate wherein one can participate and own parts of a larger real estate property through REITs.
Also watch: <a href="https://www.editorji.com/business-news/sebi-issues-guidelines-for-small-and-medium-real-estate-investment-trusts-1710151074323">SEBI issues guidelines for Small and Medium real estate investment trusts</a>
&nbsp;

SEBI introduced new regulations for financial influencers to protect investors, restrict unregistered interactions, and ensure secure fee collection by registered advisers

SEBI regulates Finfluencers; bars regulated entities from associating with unregistered Finfluencers

<h2>SEBI introduced new regulations for financial influencers to protect investors, restrict unregistered interactions, and ensure secure fee collection by registered advisers</h2>

Indian market regulator SEBI announced new regulations to oversee financial influencers, or "finfluencers," addressing growing concerns over the risks they pose to investors. These influencers, often unregulated, may offer biased or misleading financial advice, typically operating on a commission-based model.&nbsp;
<h3>Regulation on finfluencer</h3>
To mitigate these risks, Sebi's board approved measures to restrict interactions between its regulated entities and unregistered individuals. Regulated entities and their agents are now prohibited from engaging in financial transactions, client referrals, or information exchanges with anyone providing advice or making performance claims without proper registration.
Finfluencers have increasingly influenced their followers' financial decisions, prompting Sebi to implement a regulatory framework to ensure accountability and responsibility in the advice given. This move aims to protect investors from potentially harmful financial guidance.
Additionally, Sebi introduced a closed ecosystem for fee collection by its registered Investment Advisers (IAs) and Research Analysts (RAs). This system ensures that payments from clients are made only to registered professionals, helping investors avoid unregistered entities. By creating a secure payment mechanism, Sebi aims to build trust within the financial advisory ecosystem.
"The Board approved the proposal to facilitate a mechanism on an optional basis for fee collection by SEBI registered IAs and RAs which shall create a closed ecosystem thereby giving investors comfort that they are interacting with registered IAs and RAs," Sebi stated.
This mechanism not only provides assurance to investors but also helps distinguish registered advisers from unregistered ones. Though the system is optional, it is expected to enhance investor confidence and promote a more transparent and reliable advisory environment. Sebi's initiative underscores its commitment to safeguarding investor interests in an increasingly digital financial landscape.
[With PTI inputs]
Also watch: <a href="https://www.editorji.com/business-news/sebi-to-clamp-down-on-finfluencers-puts-out-consultation-paper-to-accept-public-suggestions-till-sep-15-1693220855887">SEBI to clamp down on Finfluencers: Puts out consultation paper, to accept public suggestions till Sep 15</a>

SEBI's revised framework reduces the cool-off period, allows insiders to set price limits, and mandates timely notification to stock exchanges, enhancing compliance for senior management and KMP trading plans

SEBI eases trading rules for company insiders, offers flexibility 

<h2>SEBI's revised framework reduces the cool-off period, allows insiders to set price limits, and mandates timely notification to stock exchanges, enhancing compliance for senior management and KMP trading plans</h2>

Indian market regulator SEBI has revised the 'trading plans' framework for company insiders who consistently possess unpublished price-sensitive information (UPSI). The updated rules aim to facilitate compliant trading for senior management and Key Managerial Personnel (KMP).
<h3>SEBI eases norms</h3>
Under the new guidelines, the minimum cool-off period between the disclosure and implementation of a trading plan has been reduced from six months to four months. Consequently, trading plans can now be executed six months after their public disclosure.
Insiders now have the option to set upper and lower price limits for buy and sell trades, respectively, within a &plusmn;20% range of the closing price on the submission date of the trading plan. If the security's price falls outside these limits, the trade will not proceed.
Once a trading plan is approved, the compliance officer must notify the stock exchange(s) within two trading days and disclose the set price limits. If the plan is not fully or partially implemented due to a lack of liquidity, the insider must inform the compliance officer within two trading days post-plan expiry, providing reasons and supporting documents.
The compliance officer will present this information to the Audit Committee at its next meeting. The committee will determine if the non-implementation was justified. If the committee rejects the reasons, the compliance officer will follow the Code of Conduct to take appropriate action, and notify the stock exchanges on the same day.
These changes, coming into effect 90 days after their publication in the Official Gazette, amend the insider trading rules. The regulatory framework aims to prevent trading influenced by UPSI not accessible to the public, allowing insiders to trade only if they comply with the new provisions and do not possess UPSI at the time of trading.
Sebi's revision follows a consultation paper issued in November 2023 to simplify trading processes for company officials with frequent access to UPSI.
[With PTI inputs]
Also watch: <a href="https://www.editorji.com/business-news/personal-finance/sebi-eases-kyc-norms-to-simplify-risk-management-framework-1715755705186">SEBI eases KYC norms to simplify risk management framework</a>

Sandeep Tandon, founder and CIO of Quant Mutual Fund, addressed concerns regarding capital markets regulator SEBI's investigation into suspected front-running activity at the fund house

SEBI probe into Quant MF: Founder Sandeep Tandon addresses concerns, says no alarming redemptions

Sandeep Tandon, founder and CIO of Quant Mutual Fund, addressed concerns regarding capital markets regulator SEBI's investigation into suspected front-running activity at the fund house

Sandeep Tandon, founder and CIO of Quant Mutual Fund on Wednesday, addressed concerns regarding capital markets regulator SEBI's investigation into suspected front-running activity at the fund house.
As per reports, on a call with investors and other stakeholders, Tandon announced that the fund has transitioned from midcaps to large caps and from an illiquid to a liquid strategy in recent months. Also read/watch - <a title="Pride month: 25% of Tata Steel workforce to comprise of gender minorities" href="https://www.editorji.com/business-news/pride-month-25-of-tata-steel-workforce-to-comprise-of-gender-minorities-1719405747073">Pride month: 25% of Tata Steel workforce to comprise of gender minorities</a>
He assured that their portfolio is now fairly liquid, adding that there have been no alarming redemptions. Over the last three days, their net equity outflow was 1398 crore or 1.5% of assets under management, while gross inflows remain normal.
As of June 25, the fund's liquid assets, including large-cap stocks, T-bills, G-secs, gold, and silver, total approximately 47,640 crore rupees.
He also reiterated that the fund house was fully cooperating with SEBI and that they have a dedicated team that's providing data to the regulator regularly.

SEBI has established a 15-member committee led by G Padmanabhan to enhance investor protection and risk management in equity derivatives, addressing concerns over increasing retail participation and potential market risks

F&O trading: SEBI forms committee to enhance investor protection & improve risk management

<h2>SEBI has established a 15-member committee led by G Padmanabhan to enhance investor protection and risk management in equity derivatives, addressing concerns over increasing retail participation and potential market risks</h2>

The Indian market regulator SEBI has formed a working committee to enhance investor protection and improve risk management in equity derivatives, reported Moneycontrol. This comes as SEBI is looking to tighten its grip on Futures &amp; Options trading.&nbsp;
<h3>Working group&nbsp;</h3>
As per Moneycontrol, the 15-member group is headed by former RBI Executive Director G Padmanabhan and includes representatives from the market ecosystem, such as exchanges, brokers, clearing corporations, mutual funds, a major corporate house, and academic experts in finance and risk management from the Indian Institutes of Management.
The working group's responsibilities includes suggesting near-term and medium-term measures to enhance &nbsp;investor protection in exchange-traded derivatives (ETDs), and improve risk metrics and risk architecture of ETDs, with a view to enhance market development and regulation.
<h3>Derivative markets boom</h3>
India has been witnessing a surge in retail participation, causing concerns among the government and regulators about potential widespread losses in the event of a market crash.&nbsp;
Earlier, last week, Governor Shaktikanta Das said that the RBI, along with SEBI, is keeping a close watch on the surging equity derivatives volumes, which have now dwarfed the nominal GDP of the country.
Similarly, Finance Minister Nirmala Sitharaman, in May said that the rapid rise in retail F&amp;O trading could adversely affect investor sentiment and household finances.
In early June, SEBI had floated a discussion paper proposing that the derivatives contracts on individual stocks should have sufficient liquidity and trading interest from market participants &ndash; currently a requirement only for contracts on indexes.
Also watch: <a href="https://www.editorji.com/business-news/markets/sebi-introduces-new-measures-to-curb-ipo-pricing-manipulation-1718945907567">SEBI introduces new measures to curb IPO pricing manipulation</a>&nbsp;

Front-running is an illegal practice where fund managers, dealers or brokers, who are aware of upcoming large trades, place their own orders beforehand to profit from the anticipated price movement when the large trade is executed

SEBI probes suspected front-running at Quant Mutual Fund; fund house assures cooperation

Front-running is an illegal practice where fund managers, dealers or brokers, who are aware of upcoming large trades, place their own orders beforehand to profit from the anticipated price movement when the large trade is executed

Quant Mutual Fund has acknowledged receiving enquiries from capital markets regulator SEBI and said that it will fully cooperate with the ongoing investigation. In a letter to investors, the asset management company stated that it will provide all necessary support and continue to furnish data to SEBI on a regular and as-needed basis. The company also reassured investors of its primary goal to deliver superior risk-adjusted returns. Also read/watch - <a title="Union Budget 2024 | Farm bodies seek higher agri R&amp;D spending, subsidy reforms" href="https://www.editorji.com/business-news/union-budget-2024-farm-bodies-seek-higher-agri-r-d-spending-subsidy-reforms-1718971690314">Union Budget 2024 | Farm bodies seek higher agri R&amp;D spending, subsidy reforms</a> SEBI is currently investigating potential irregularities suspected front-running activities at Sandeep Tandon owned Quant Mutual Fund. As per sources quoted by CNBC-TV18, the regulator conducted search and seizure operations in Delhi, Mumbai and Hyderabad. Quant Mutual Fund has experienced rapid growth in recent years, with its assets increasing from approximately ₹100 crore in 2019 to over ₹93,000 crore currently. The number of investor folios has surpassed 80 lakh, as noted in the communication to investors. Front-running is an illegal practice where fund managers, dealers or brokers, who are aware of upcoming large trades, place their own orders beforehand to profit from the anticipated price movement when the large trade is executed.

SEBI's confirmatory order bans JM Financial from managing debt public issues until March 31, 2025, following alleged irregularities. This restriction does not impact equity issues, and JM Financial has pledged voluntary compliance improvements

Restrictions on JM Financial: SEBI confirms ban on managing public debt issues until 2025

<h2>SEBI's confirmatory order bans JM Financial from managing debt public issues until March 31, 2025, following alleged irregularities. This restriction does not impact equity issues, and JM Financial has pledged voluntary compliance improvements</h2>

Securities and Exchange Board of India issued a confirmatory order on Thursday barring JM Financial Ltd from acting as a lead manager for public issues of debt securities until March 31, 2025, due to alleged irregularities in a public issue of non-convertible debentures (NCDs). This restriction, however, does not impact JM Financial Ltd&rsquo;s (JMFL) other activities, including equity issues.
<h3>Restriction on JM Financial</h3>
In response, JM Financial stated in a filing that the order aligns with the company's voluntary undertaking. The company confirmed that it would not take new mandates as a lead manager for public issues of debt securities until the specified date or as further directed by Sebi.
The confirmatory order follows Sebi's interim directive in March, which initially prohibited JMFL from accepting new mandates as a lead manager for debt securities. Sebi's preliminary findings suggested that JMFL engaged in irregular practices involving retail investors and related companies within the JM Group. It appeared that JM Group entities incentivized investors to apply for securities in issues managed by JMFL. Significant NCD allocations were made to retail investors, who then sold these securities on the listing day, primarily to JM Financial Products Limited (JMFPL), a JM Group NBFC. JMFPL subsequently sold these securities at a loss.
Additionally, many retail investor applications were funded by JMFPL through JM Financial Services Ltd, with JMFPL holding power of attorney over these accounts.
Following the interim order, JMFL requested Sebi not to confirm the restrictions and proposed voluntary undertakings instead. In hearings held on April 24 and June 18, 2024, JMFL reiterated these undertakings without contesting the merits of the case. As part of its voluntary commitments, JM Financial pledged to cease taking new mandates as a lead manager for public debt issues until March 31, 2025, or as further directed by Sebi.&nbsp;
Furthermore, JMFL&rsquo;s board decided to stop IPO financing and enhance its systems and processes to prevent misconduct. This includes staff training, regulatory workshops, and submitting a compliance certificate by December 31, 2024.
Sebi has decided to maintain the interim restrictions, part of JM Financial's voluntary undertaking, until the investigation concludes.
Also watch: <a href="https://www.editorji.com/business-news/jm-financial-banned-from-public-debt-issue-participation-by-sebi-1709822221260">JM Financial banned from public debt issue participation by SEBI</a>

SEBI's new measures include a 60-minute pre-open session with random closure, enhanced surveillance, and real-time canceled order displays to prevent IPO price manipulation

SEBI introduces new measures to curb IPO pricing manipulation

<h2>SEBI's new measures include a 60-minute pre-open session with random closure, enhanced surveillance, and real-time canceled order displays to prevent IPO price manipulation</h2>

Securities and Exchange Board of India (Sebi) introduced new surveillance measures for stock exchanges to prevent the misuse of the pre-open call auction session during initial public offerings (IPOs).
This session will now last for 60 minutes, starting at 9 am. It includes 45 minutes for order entry, modification, and cancellation, 10 minutes for order matching and trade confirmation, and a 5-minute buffer to transition to the regular trading session.&nbsp;
<h3>IPO price discovery</h3>
To enhance price discovery based on supply and demand, the session will close randomly within the last ten minutes of the order entry period, between the 35th and 45th minute. This closure will be system-driven, as per Sebi&rsquo;s circular.
Sebi noted that some IPO and relisted stock call auction sessions have seen large orders placed at inflated prices, with many canceled just before the session's end. This activity could create misleading demand and supply signals, potentially manipulating stock prices to the detriment of retail investors.
To address these issues, stock exchanges are instructed to implement robust surveillance mechanisms during the pre-open call auction sessions. Alerts will be generated based on specific criteria, such as significant price modifications from previously placed orders, a client&rsquo;s canceled order quantity exceeding 5% of the market's total, and the value of a client's canceled orders exceeding 5% of the total market value.
These alerts must be reported to Sebi by the end of the day. Exchanges will also analyze these alerts and seek explanations from clients for significant cancellations or modifications.
To promote transparency, the number and quantity of canceled orders will be displayed in real-time on the stock exchange&rsquo;s website and trading terminals. This will enable investors to make more informed decisions regarding stock pricing.
This framework will come into effect 90 days from the issuance of the circular.
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SEBI has eased regulations, removing the freeze requirement for demat accounts and mutual fund folios without a nomination choice. Physical securities holders can now receive payments without submitting nominations

SEBI to not freeze demat & mutual fund accounts for failing to file nomination

<h2>SEBI has eased regulations, removing the freeze requirement for demat accounts and mutual fund folios without a nomination choice. Physical securities holders can now receive payments without submitting nominations</h2>

The Securities and Exchange Board of India (SEBI) has relaxed regulations for existing investors by removing the requirement to freeze demat accounts and mutual fund folios if a 'choice of nomination' is not provided. This significant change aims to enhance investor convenience and ease compliance.
<h3>SEBI eases norms</h3>
Previously, SEBI had set a deadline of June 30, 2024, for all existing individual mutual fund holders to either nominate someone or opt out of nomination. Failure to meet this deadline could have resulted in their accounts being frozen, preventing any withdrawals. However, based on feedback from market participants, SEBI decided that non-submission of 'choice of nomination' will no longer lead to such account freezes, according to a circular issued on Monday.
Moreover, investors holding securities in physical form are now eligible to receive any payments, including dividends, interest, or redemption payments, and can lodge grievances or make service requests from the Registrars to an Issue and Share Transfer Agents (RTAs) without submitting a 'choice of nomination'.
SEBI has also instructed listed companies and RTAs to process payments currently withheld due to the lack of a 'choice of nomination'. While existing investors are relieved from mandatory nominations, all new investors and unitholders must still provide a 'choice of nomination' when opening demat accounts or mutual fund folios, except for jointly held accounts.
Depository participants, asset management companies (AMCs), and RTAs are tasked with encouraging investors to update their nomination choices. They are required to send fortnightly communications via email and SMS to investors who have not yet provided their nominations. From October 1, a pop-up reminder will be displayed on web and mobile platforms when investors log into their demat or mutual fund accounts.
To streamline the process, SEBI has simplified the format for submitting nominations or opting out. Investors need to provide only three mandatory fields: the nominee's name, the nominee's share, and the relationship with the applicant.
This move by SEBI aims to make the nomination process more accessible and user-friendly, ensuring that investors can manage their investments without undue hassle or risk of account freezes.
[With PTI inputs]
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Stock exchanges will issue the framework for material price movement on its websites

SEBI releases guidelines to manage impact on stock price due to market rumours

Stock exchanges will issue the framework for material price movement on its websites

Capital markets regulator SEBI has released guidelines for managing the impact of stock prices due to market rumours. As per Business Standard, SEBI has introduced a concept of unaffected stock price to reduce any artificial fluctuations in stock price.
SEBI has said that the entity will need to verify or respond to the rumours, if there is a material movement in price. A SEBI circular dated January 25th, says that the requirement to verify market rumours will apply to the top 100 listed entities effective June 1st 2024 and top 250 listed entities effective December 1st 2024. Stock exchanges will issue the framework for material price movement on their websites.
The Securities and Exchange Board of India (Sebi) has sought comments from the public till June 11 on the proposals.
With regards to buyback norms, the committee has suggested allowing conversion of ESOPs or convertible instruments if the exercise or conversion date falls within the buyback period. Also, it has been suggested to disclose details of outstanding ESOPs and convertible instruments in the public announcement.
The current rules prohibit issuing any shares or securities, including bonus shares, until the buyback period ends.

SEBI updates market cap calculation for listed firms to six-month averages. Vacancy filling time extended to six months in some cases. Board meeting intimation timeline harmonized to two working days for uniformity

SEBI forms new formula to determine m-cap; to use 6-months average

<h2>SEBI updates market cap calculation for listed firms to six-month averages. Vacancy filling time extended to six months in some cases. Board meeting intimation timeline harmonized to two working days for uniformity</h2>

The Securities and Exchange Board of India (SEBI) has updated the method for calculating the market capitalisation of listed companies under the Listing Obligations and Disclosure Requirements (LODR) rules. Previously, market capitalisation was calculated based on a single day's data, typically on March 31. However, the new method will use the "average market capitalisation" over a six-month period.
<h3>New formula for m-cap</h3>
Market experts support this change, noting that daily fluctuations in market capitalisation due to market dynamics make a single-day calculation less accurate. By averaging the market capitalisation figures over six months, the new method aims to provide a more accurate reflection of a company's market size and its ranking among peers.
This change stems from a recommendation by an expert committee chaired by SEBI's former whole-time member, S K Mohanty. The committee aimed to enhance the ease of doing business and bring more precision to market capitalisation calculations. The new amendment will take effect on December 31, 2024, according to a SEBI notification issued on May 17.
Under the revised rules, compliance ranking will be based on average market capitalisation from July 1 to December 31, with December 31 serving as the cut-off date. After determining the market capitalisation on December 31, there will be a three-month transition period, or from the start of the immediate next financial year, whichever is later, before the relevant provisions become applicable.
SEBI stated, "Every recognised stock exchange shall, at the end of the calendar year i.e., December 31, prepare a list of entities that have listed their specified securities, ranking such entities based on their average market capitalisation from July 1 to December 31 of that calendar year." If an entity's ranking changes for three consecutive years, the new provisions will cease to apply to that entity, offering relief to those experiencing significant market capitalisation fluctuations.
Additionally, SEBI has extended the time limit for filling key managerial personnel (KMP) vacancies from three months to six months in certain cases. If a listed entity needs regulatory, government, or statutory approval to fill such vacancies, these should be addressed as soon as possible, but no later than six months from the vacancy date.
To maintain uniformity, SEBI has harmonised the timeline for prior intimation of board meetings to two working days for all event types. Current LODR regulations require listed companies to notify stock exchanges about board meetings for specific proposals, such as financial results and share buybacks, within a 2-11 working day range.
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SEBI has relaxed the KYC norms and has noted that KRAs shall verify the client's Permanent Account Number, name, and address within two days of receiving KYC records

SEBI eases KYC norms to simplify risk management framework

<h2>SEBI has relaxed the KYC norms and has noted that KRAs shall verify the client's Permanent Account Number, name, and address within two days of receiving KYC records</h2>

Markets regulator Securities Exchange Board of India (SEBI) has relaxed the Know Your Customer Norms to simplify the risk management framework. SEBI &nbsp;issued an updated notification on the master circular dated October 12.
&ldquo;Sebi circular dated October 12, 2023, has specified the Risk Management Framework at KRAs ((KYC Registration Agencies) wherein the attributes for verification by KRAs have been mentioned. Based on the feedback received from the stakeholders in the securities market and for ease of transacting by clients, the provisions of the Master Circular dated October 12, 2023, have been reviewed and it has been decided to simplify the risk management framework," the markets regulator said in an official release.
<h3>KYC norms eased</h3>
SEBI has noted that KRAs shall verify the client's Permanent Account Number (PAN), name, and address within two days of receiving KYC records. It also added that clients' records verified by KRAs with official databases (such as the Income Tax Department database on PAN, Aadhaar XML, Digilocker or M-Aadhaar) shall be considered &lsquo;validated records&rsquo;. SEBI has set May 31, 2024 as the deadline for exchanges, depositories and intermediaries concerned to complete the necessary technical change in their systems.&nbsp;
On October 12, SEBI released a master circular on KYC rules for investors to enable users to access all the applicable circulars and directions in one place.
&ldquo;This master 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 interest of investors in securities and to promote the development of, and to regulate, the securities market," the circular read.
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NSE's MD & CEO Ashish Chauhan has said that SEBI has returned the exchange's proposal to increase the stock market trading time due to lack of consensus among broker community

SEBI rejects NSE's proposal to extend trading hours

<h2>NSE's MD &amp; CEO Ashish Chauhan has said that SEBI has returned the exchange's proposal to increase the stock market trading time due to lack of consensus among broker community</h2>

The National Stock Exchange MD &amp; CEO Ashishkumar Chauhan has said that the capital markets regulator SEBI has rejected its proposal to increase trading hours
<h3>No extension in trading time</h3>
As per media reports, Chauhan during an analyst call said that SEBI has returned the exchange&rsquo;s proposal to increase trading time due to a lack of consensus among the broker community. He added that the stock brokers have not given the feedback to SEBI and hence the extended timeframe for trading is shelved as of now.
CNBC-TV18 in February reported that the Association of National Exchange Members of India (ANMI) had given its in-principle approval for the proposal to extend trading hours for index futures. It further said that the Brokers Industry Standards Forum (ISF) will send a formal letter to SEBI in this regard
NSE's proposal
The National Stock Exchange last year had proposed the extension of &nbsp;hours for index F&amp;O trading in a phased manner. NSE had said that it is planning to extend the trading hours for equity derivatives in a phased manner, following representations from various stakeholders.
During the first phase NSE had mulled extending the trading hours between 6 p.m. IST and 9 p.m. IST, in addition to the regular trading hours of 9:15 a.m. to 3:30 p.m. In the second phase Index derivatives trading would be extended till 11:30 PM. Finally, in the third phase, the plan is to extend cash market trading hours until 5 PM.
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Making nomination optional for jointly-held mutual fund accounts is expected to streamline the transmission process and reduce hassle, as surviving members can now become nominees, with the flexibility to assign nominees later

Nomination for jointly-held mutual fund accounts optional: SEBI

<h2>Making nomination optional for jointly-held mutual fund accounts is expected to streamline the transmission process and reduce hassle, as surviving members can now become nominees, with the flexibility to assign nominees later</h2>

Capital markets regulator SEBI has now made it optional to have a nominee for jointly-held mutual fund accounts
"Accordingly, it has been decided that the requirement of nomination ....for mutual funds shall be optional for jointly held mutual fund folios," the Securities and Exchange Board of India (Sebi) said in a circular.
<h3>SEBI's Measures</h3>
The decision follows a comprehensive review of mutual fund regulations by a working group constituted by Sebi, which recommended various measures to facilitate business operations.
As per Sebi's circular, the requirement of nomination for jointly held mutual fund folios is now optional, simplifying the nomination process for investors. This change is expected to streamline the transmission process and reduce hassle, as surviving members can now become nominees, with the flexibility to assign nominees later.
In another significant move, Sebi has relaxed the provision regarding dedicated fund managers. For commodity-based funds like Gold ETFs and Silver ETFs, as well as funds participating in the commodities market, appointing a dedicated fund manager is now optional. Similarly, for overseas investments, the appointment of a dedicated fund manager is also optional.
Sebi has set a deadline of June 30, 2024, for existing individual mutual fund holders to nominate or opt out of nomination. Failure to comply with this deadline will result in the freezing of accounts for withdrawals.
Furthermore, Sebi has introduced measures to allow fund houses to appoint a single fund manager to oversee commodity and foreign investments, a move expected to reduce operational costs.
The introduction of a single fund manager for domestic and overseas/commodity funds aims to streamline fund management processes and reduce operational costs, aligning with Sebi's objective of promoting efficiency and ease of doing business in the mutual fund sector.
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