Regulations
Grey areas in insider trading regulations needs clarity: Experts
Corporate compliance officials hold that the new regulations have imposed some additional risks on them as a large community of outsiders including journalists, vendors, bankers and others have been included under the definition of the term insider
 
The Indian securities market regulator has to clarify certain grey areas such as whether the employee stock options (ESOP) is also covered by its new insider trading regulations that came into force on May 15, say legal and industry experts.
 
Corporate compliance officials hold that the new regulations have imposed some additional risks on them as a large community of outsiders including journalists, vendors, bankers and others have been included under the definition of the term insider.
 
"The old insider trading regulations expressly kept out ESOPs whereas the new regulations do not as per interpretations. Normally ESOP schemes are well-defined and it is an option to buy," S.Swaminathan, chief financial officer, Intellect Design Arena Ltd, told IANS.
 
"It should also be said any step towards improvement of corporate governance is welcome," he added.
 
Pratibha Jain, partner and head, regulatory practice, Nishith Desai Associates, told IANS that the Securities and Exchange Board of India has overhauled the insider trading regulations "with a view to provide a level playing field in the securities market and also to safeguard investor interest".
 
She also agreed that the ESOP issue is a grey area that SEBI has to address. According to her colleague Tanya Pahwa, the 1992 insider trading regulations had kept out ESOPs.
 
"Under the new regulations, the scope of the term 'insider' or a 'connected person' has been widened.
 
"Therefore, any person, whether or not related to the company, may come within the purview of the regulations if he is expected to have access or possess unpublished price sensitive information. Applicability of the regulations shall extend to unpublished price sensitive information in relation to a company as well as securities listed or proposed to be listed on a stock exchange," Jain said.
 
The new regulations - Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 - define an insider as any connected person or any person in possession of or have access to unpublished price sensitive information.
 
A connected person includes any person who is or has during the six months prior to the concerned act been associated with the company, including through frequent communication with its officers or as a director, officer, vendor and others with an access to unpublished price sensitive information.
 
The term connected persons include immediate relatives; holding/subsidiary or associate company; mutual fund; stock exchange or clearing house official; banker and others.
 
According to Intellect Design Arena's Swaminathan, a large third-party community has been included as insider and it is a challenge for listed companies to get disclosure compliance from them.
 
"Perhaps a monetary threshold level of dealing in securities should be stipulated by SEBI," he said.
 
The regulations will also extend to unpublished price sensitive information in relation to a company as well as securities listed or proposed to be listed on a stock exchange, Jain said.
 
"For the purpose of legitimate business transactions, access to unpublished price sensitive information, for instance, of due diligence, with appropriate safeguards has been explicitly provided for which shall avert the risk of any regulatory scrutiny in relation to such transactions," she said.
 
The board of directors of every listed company and market intermediary have to draw up a code of conduct to regulate, monitor and report trading by its employees and other connected persons in accordance with the regulations, she added.
 
Jain said the regulations further provide every other person who is required to handle unpublished price sensitive information in the course of business operations such as auditors, accountancy firms, law firms, analysts, consultants, other capital market participants and others are also required to draw up such a code of conduct.
 
Therefore, even entities that normally operate outside the capital market may be required to formulate such a code depending on their exposure to unpublished price sensitive information.
 
Also, every such person formulating a code of conduct is required to identify and designate a compliance officer to administer the same, Jain remarked.
 
"Trading in the security of the company is not permitted when trading window is closed on account of a unpublished price sensitive information. Further, pre-clearance is required for a trade exceeding Rs.10 lakh, even if the trading window is not closed."
 
The trading window is supposed to close for a company upon certain events like declaration of financial results and opened upon cooling-off period of 48 hour of relevant information becoming generally available.
 
The management, in addition to the penalty by the regulator, can also initiate disciplinary action against violators with steps that can include wage freeze, suspension, ineligibility for future participation in stock options and withholding of promotions.
 
"While the new regulations widen the ambit, a lot more investment in monitoring and surveillance needs to be made. Even globally it is not easy to catch insider trading. And which is why exemplary punishment needs to be handed out which would act as a strong deterrent," Pranav Haldea, managing director, Prime Database, told IANS.
 
Jain however noted that SEBI has an investigation arm responsible for looking into any alleged wrongdoings.
 
"Based on recent amendments to the SEBI Act, they also have power of search and seizure. SEBI investigation for insider trading is typically based on a tip or one of exchanges reporting unusual activity in trading of a stock," she said.

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Safe, Habitable or Smart? India's 100 Smart Cities must be all three
India clearly needs to morph its Smart Cities plan into one that lays equal emphasis on making our cities most habitable and safe
 
Each time there is a mention of Smart Cities in India, I get concerned about the safety of women because there is a surfeit of news stemming from the vulnerability of women in our cities. A few incidents that shook India recently, include:
 
* A police officer attacks an allegedly errant scooter-riding woman with a brick in India's capital.
 
* A 13-year-old girl pushed off a moving bus in Moga in Punjab along with her mother after they resisted molestation attempts.
 
* A young girl walking back home in Ludhiana is raped on International Women's Day, March 8.
 
These incidents paint the picture of cities unsafe for women and children on foot, in own vehicles or while using public transport.
 
From unsafe to unhealthy cities, India attracts attention. A recent UN study noted that the highest concentration of PM (particulate matter) 2.5 is in Indian cities. These tiny airborne particulates can increase the risk of heart disease and respiratory ailments. The PM 2.5 levels in the national capital New Delhi are so high that breathing the air for only a few hours can have an irreversible health impact.
 
These upsetting reports bring out the need for safer and more habitable cities before India builds 100 Smart Cities. Even though proponents of Smart Cities may argue that the choice is not between safe and habitable versus Smart Cities, the government clearly needs to take demonstrative action to instill confidence among women in India to restore a sense of safety.
 
India clearly needs to morph its Smart Cities plan into one that lays equal emphasis on making our cities most habitable and safe. While Smart Cities are necessary, the liveability aspect needs to get top priority. The recent, albeit temporarily halted, move by the National Green Tribunal to ban all over 10-year-old diesel vehicles from plying on Delhi roads is commendable. That perhaps is the only way to show to the rest of the country what needs to be done to make the country more habitable. One only hopes that its implementation does not lead to dilution.
 
At the same time, we urgently need a road infrastructure that does not hold up non-polluting vehicles on road a minute longer than is necessary. Once among most green Indian cities, Pune and Bangalore are now home to glass and concrete structures. Despite a salubrious climate and green spaces, these high-tech cities ranked 145th (Pune) and 146th (Bangalore) in the 2015 most liveable cities ranking by global consulting firm Mercer. Singapore, known for its standards of cleanliness, discipline and safety, at No.25 is the highest-ranking Asian city in the same listing.
 
Ranked the most liveable city for six consecutive years by Mercer, Vienna also won global recognition for being a Smart City by climate strategist Boyd Cohen. Vienna may offer a good benchmark for the most habitable city. In addition to being green and clean, the city is also Safe.
 
After its inauguration 150 years ago, Vienna remains the most well-planned and architected city. Unlike Indian cities, it follows a zero tolerance policy towards departure from sanctioned building plans - an area that needs stricter conformance in India.
 
The Austrian capital is a pedestrian-friendly, cycle-friendly city where lane discipline is observed almost like a religion. The differently-abled, wheel-chair borne and the most careless walker can traverse through pothole-free levelled roads.
 
Safe, Efficient and Reliable Public Transport
 
The next important element is an efficient transport system ensures that every part of the city is well connected. By deploying smart travel cards, it affords safe and convenient travel for women, those with children and elderly people by various modes, at any time of the day.
 
For safe, habitable and smart cities, India's public transport system needs to be scaled up to create options where most citizens prefer public transport to their private vehicles. The dependence on personal vehicles for work has to reduce. Movement on India's inadequate road infrastructure will become even tougher and unsustainable as it adds nearly two million vehicles a month.
 
Very few Indian cities can boast of roads that offer a safe journey to its inhabitants. Even though the recent budget allocation to the sector gives one the confidence that the road infrastructure will get created, it needs to be backed by an infrastructure that is safe, takes into account the future traffic needs and ensures that sidewalks are not dysfunctional.
 
Climate strategist Boyd Cohen says Smart City has to be much more than just a buzzword: it is the way of the future. A Smart City needs measures to radically reduce energy consumption and greenhouse gas emissions and further optimize the public transportation network to deliver an even higher quality of life for many years to come.

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Chit fund firm boss held in Odisha
Odisha's crime branch (CB) team on Sunday arrested the managing director of Vista Management Services Ltd. in connection with a multi-crore-rupee chit fund scam in the state.
 
The Economic Offences Wing (EOW) of the crime branch arrested Deb Kumar Panda, managing director of the chit fund company, for duping depositors of about Rs.50 crore, superintendent of police of EOW Rajendra Patnaik told reporters here. 
 
He said Panda was arrested from the Bhubaneswar railway station while leaving for Vizag for a flight to Singapore. 
 
The police also seized his passport, visa, air ticket, hotel booking receipt and some foreign currency from his possession. 
 
The crime branch arrested the accused on the basis of a complaint lodged by several depositors from western Odisha on April 23 this year. 
 
Panda, who began operating the chit fund company in 2008-2009 in the state, is alleged to have duped depositors of about Rs.50 crore by floating various schemes and promising lucrative returns. 
 

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