Strengthening fair market access

Besides the Dave consultation committee’s report on consent, Sebi is gathering feedback on recommendations ma deb yT K Vishwanathan-headed committee on fair market access. The committee has proposed measures to include improvement in surveillance, investigation and enforcement mechanisms. While a proposal to give Sebi powers to intercept phone calls has grabbed headlines, the committee has made several suggestions to strengthen the existing security market provisions. As per an analysis by law firm Cyril Amarchand Mangaldas, following are some of the key proposals in the report: Trading based on ‘verifiable financial sources’: Amount of trading an investor can undertake should be proportional to the investor’s verifiable income. This measure is to grapple with the problem of mule accounts or front entities Financial fraud: Introduction of a provision in the Sebi Act to clarify the regulator’s powers to take steps for misstatement in the financial statement that impact investors. Currently, frauds relating to financial statements, book of accounts trigger action only under the Companies Act Separate code for listed companies and unlisted intermediaries: The committee suggested an overhaul of the code of conduct in terms of insider trading rules. Currently, listed companies and unlisted market intermediaries follow the same conduct Sharing information for due diligence: The board of directors of the target company should be required to opine that the sharing of price-sensitive information for due diligence is in the best interest of the company. This is a change from the current form, which requires the board to opine if the proposed transaction, is in the best interest of the company Definition of unpublished price sensitive information( UPS I ): Revising the definition of UPS I to exclude reference to“material events in accordance with the listing agreement” since a material event may not essentially be UPS I Definition of ‘dealing in securities’: Amend the definition of ‘dealing in securities’ to cover indirect participants whose action influences the investor decisions