Regulations
SEBI-FMC merger to take place next month; Board approves norms
The SEBI Board approved draft amendment to regulations that would be notified on 28th September for repealing of FCRA, necessary for merger of FMC with the market regulator 
 
Market regulator Securities and Exchange Board of India (SEBI) has approved draft amendment to regulations that would pave way for the merger of Forward Market Commission with SEBI. "These regulations will enable functioning of the commodities derivatives market and its brokers under SEBI norms and integration of commodities derivatives and securities trading in an orderly manner," the market regulator said in a release.
 
The SEBI Board met in Mumbai on Monday and approved the draft amendment to regulations that would be notified on 28 September 2015 for the proposed repealing of the Forward Contracts Regulation Act, 1952 (FCRA), necessary for the merger of two regulators.
 
The Board also approved amendments to SEBI (Stock Broker and Sub-Broker) Regulations, 1992 to provide for registration of the members of the commodity exchanges. Existing members of these exchanges are required to make an application for registration with SEBI within three months from the notification date. In such a case, they will be allowed to continue their activity unless their application is rejected by SEBI
 
The draft regulations provide for compliance of Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 (SECC Regulations) which are currently required to be complied with by stock exchanges. The major compliances include norms related to net-worth, shareholding norms, composition of board, corporatisation and demutualisation and setting up of various committees, turnover and infrastructure.
 
To ensure non-disruptive transition, SEBI has prescribed following timelines for aligning to the different provisions of SECC Regulations:
 
(i) Corporatization and demutualization of regional commodity derivatives exchanges - three years from the date of merger.
 
(ii) Availing services of a clearing corporation - three years from the date of merger. Till then, clearing may continue with the current arrangement.  However, the Commodity Exchanges shall ensure guarantee for the settlement of trades including good delivery.
 
(iii) Net-worth - timeline as provided by FMC, i.e. 5 May 2017, for national commodity derivatives exchanges and within three years from the date of merger for regional ones.
 
(iv) Shareholding - timeline as provided by FMC, i.e., 5 May 2019, for national exchanges and within three years from the date of merger for regional exchanges.
 
(v) Governing board norms - within one year from the date of merger for national exchanges and within three years for regional exchanges.
 
The SEBI Board also decided to remove current restrictions on maximum number of anchor investors (at present 25) for anchor allocation of above Rs250 crore public issue. "While the requirement of number of anchor investors for allocation of up to Rs250 crore remains the same, in case of allocation beyond Rs250 crore there can be 10 additional investors for every additional allocation of Rs250 crore, subject to minimum allotment of Rs5 crore per anchor investor," the market regulator said in the release.
 
To align SEBI (Share Based Employee Benefits) Regulations, 2014 (SBEB Regulations) with the new rule 19A(4) of the Securities Contracts (Regulation) Rules, 1957, formulated by the Government of India, the market regulator decided to approve proposals to amend the provisions of SBEB Regulations.
 
Clarifying exercise of employee stock ownership plan (ESOP), a guidance note was placed before the Board. The Guidance Note, inter alia, clarifies that exercise of ESOPs is not considered as 'trading' for the purpose of the Regulations, except provisions relating to disclosures. "This will remove the difficulties of the designated persons with regard to exercise of ESOPs and the sale of shares so acquired," SEBI added. 
 
The Board also decided to place a discussion paper on SEBI website seeking public comments on the proposal to provide general exemption from the open offer obligations under SEBI (SAST) Regulations, 2011 in the cases of increase in voting rights as a result of expiry of call notice period and forfeiture of shares.
 
In addition, the Board recommended that public comments may be sought on the recommendations of the Committee on Clearing Corporations. Earlier in July 2015, the 'Committee on Clearing Corporation' set up under the Chairmanship of KV Kamath, to inter-alia examine viability of single clearing corporation or interoperability between clearing corporations and other issues relating to clearing corporations (CC), submitted its report.
 
The Kamath Committee has made following recommendations...
(1) Interoperability between Clearing Corporations.
(2) Investment by Clearing Corporation.
(3) Review of Transfer of 25% profits every year by recognised Stock Exchanges to recognised Clearing Corporations.
(4) Review of Transfer of 25% profits every year by Depositories to their Investor Protection Fund (IPF).
(5) Liquid assets for the purpose of calculation of Net worth of a Clearing Corporation.

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Global stock markets in turmoil
In sympathy, Sensex, the key equity index of the Bombay Stock Exchange (BSE) dived 5.94%, while the wider 50-scrip Nifty of the National Stock Exchange followed a similar trend and closed 491 points or 5.92% down at 7,809 points
 
Stock markets from Japan to the US are on a major tailspin. A huge fall in the US stock market on Friday has triggered off a domino effect on global stock markets after two years of relative calm. 
 
Nikkei 225, the main index of Asia’s biggest stock market, Japan, closed 4.6% lower at 18,540.68 points, its lowest level in nearly five months. The Hong Kong Hang Seng index dropped 4.9% to 21,313.28, while the Shanghai stock index collapsed 8.5%. In sympathy, Sensex, the key equity index of the Bombay Stock Exchange (BSE) dived 5.94%, while the wider 50-scrip Nifty of the National Stock Exchange followed a similar trend and closed 491 points or 5.92% down at 7,809 points. The rupee also fell to 66.70 to a dollar.
 
More bloodbath seems to be in store as US pre-market futures for S&P500 and Dow are quoting 3.5% lower while Nasdaq futures is already limit down.
 
 
 
The S&P BSE Sensex which opened at 26,730.40 points, closed at 25,741.56 points, down 1,624.51 points or 5.94% from its previous close of 27,366.07 points. The benchmark index touched a high of 26,730.40 points and a low of 25,624.72 points during the intra-day trade.
 
Chinese shares continued their sharp fall on Monday as concerns over the country's slowing growth and volatile markets sparked panic among traders. The mainland benchmark index, the Shanghai Composite, closed down 8.5% at 3,209.91 points, extending last week's losses. The sell-off continued despite Beijing's latest attempts to reassure investors. China's dramatic tumble has dragged down markets across the region.
 
Chinese investors are looking to the government to solve the problem of a falling market.  Beijing has responded by allowing its main state pension fund to invest in the stock market. Under the new rules, the fund will be allowed to invest up to 30% of its net assets in domestically-listed shares. By increasing demand for them, the government hopes prices will rise. But this has failed to reassure traders both in China and abroad. There are fears that if millions of citizens lose their life savings in the stock market, the government may face its greatest fear: widespread social unrest.
 
Reacting to the sharp fall in the Indian markets when they opened trading on Monday, Finance Minister Arun Jaitley held "external factors" responsible for the current volatility.
 
"Factors responsible for this (market fall) are entirely external, there is not a single domestic factor involved," Jaitley told reporters here on the sidelines of the conference of chief commissioners of the Central Board of Excise and Customs.
"No doubt this turbulence is transient and temporary in nature and the markets will settle down once the turbulence is over," he said.
 
"All concerned authorities, the government of India, the Reserve Bank are watching the situation very closely," the minister said.
 
While checking out the reaction of market experts, Nilesh Shetty, Associate Fund Manager- Equity, Quantum AMC, said on today’s market crash, “Expensive valuations with weak corporate earnings growth meant the market had significantly higher downside risks. Weak global cues especially from China have acted as a trigger for this correction. Despite near term risks, lower market levels could prove to be a great buying opportunity for the long term investor.”
 
The top gainers and top losers in the major indices in the Indian stock markets are given in the table below:
 
 
The closing values of major Asian indices are given in the table below:
 
 
Among European indices, the DAX was at 9,845.95, down 2.75% and the FTSE 100 was at 6,018.32, down 2.74%.

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Maharashtra CMs have no time for Mumbai's Mithi River development
Since 2010, successive CMs of Maharashtra have not called a single meeting on the development of Mithi River, which was the main cause for Mumbai's great deluge in 2005, reveals a reply received under RTI 
 
Successive Chief Ministers (CMs) in Maharashtra have not held a single meeting over the past five years on the development of Mithi River that caused the infamous 26/7 deluge of Mumbai, reveals a reply received under the Right to Information (RTI) Act.
 
According to information provided by Mithi River Development and Protection Authority (MRDPA) to activist Anil Galgali, over the past five years, the Authority, which works under the Chairmanship of the CM, has not held a single meeting. "Over the past five years, three successive CMs, Ashok Chavan, Prithviraj Chavan and Devendra Fadnavis have not held a single meeting of the Authority on the development plan for the Mithi River," the RTI reply reveals.
 
Almost 10 years ago, on 26 July 2005, Mumbai faced a deluge, which was mostly blamed on the Mithi River, as it could not carry the excess rainwater out into the sea due to silt and garbage. To ensure that there is no repetition of the situation, the state government decided to restore the glory of the Mithi River, which has got converted into a nalla, and on 19 August 2005 set up MRDPA. Over the next few years, the Authority held six meetings, two in 2005, one each in 2006, 2007, 2008 and 2010. However, after that no meeting took place, Galgali says.
 
The length of the Mithi river is 17.8kms and its development is carried out by Municipal Corporation of Greater Mumbai (MCGM) and Mumbai Metropolitan Region Development Authority (MMRDA). While MCGM looks after the development of 11.8 kms from Vihar Lake to CST bridge, the MMRDA is responsible for developing the balance 6 kms from CST bridge to Mahim causeway, including the Vakola nalla portion.
 
"Though Rs1,200 crore have been spent on the development activities of the Mithi river till date, the work remains unsatisfactory due to the disinterest shown by successive CMs since 2010," Galgali alleged. 
 
He asked incumbent CM Fadnavis to immediately look into the matter and convene a meeting of the Mithi River Authority. 
 
Apart from the CMs, the Chief Secretary is the nominated Chairman of the High power Committee of the Authority, which so far has held only 11 meetings since establishment. Of the 11 meetings, one meeting each was held in 2005 and 2012, two meetings each were held in 2006 and 2008, and a maximum five meetings were held in 2013 alone. "Erstwhile Chief Secretaries J Saharia and present CS Swadheen Kshatriya also seem to share the disinterest exhibited by the CMs and appear to have pledged not to convene meetings during their respective tenure's. When I queried about how many meetings have to be held mandatory in a year, I was informed that no such rule is in the govt resolution," Galgali said.
 
Mithi River originates from the overflow of Vihar Lake and also receives the overflows from the Powai Lake about 2kms later. It flows for a total of 15kms before it meets the Arabian Sea at Mahim Creek flowing through residential and industrial complexes of Powai, Saki Naka, Kurla, Kalina, Vakola, Bandra-Kurla complex, Dharavi and Mahim.
 
When the river was not as polluted as it is today, Mithi River used to serve as an important storm water drain for Mumbai. However it has been used as a sewer over the years and its importance as a storm water drain has reduced and on the contrary, the River poses a hazard during high tide bringing polluted water into Mumbai.

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COMMENTS

Meenal Mamdani

2 years ago

Speaks volumes about the administrative capabilities and interest in clean up of our CMs. Both Congress and BJP stand indicted. The 200 crore spent on setting up the committee should be recovered from the political parties who are responsible for the performance of their hand picked ministers.

One reason why this has taken a back seat is because the crisis occurred too far back. Politicians think only of today's crisis.

Another reason is clean up will require upsetting important constituents, people who have encroached on the rive bed. I am not talking of the poor who live in precarious huts along the banks but of wealthy builders and industrialists who have flouted rules with impunity.

We all are grateful to activists like Mr. Galgali and media like MoneyLife who have persisted in their efforts to prod the govt machinery into action.

We are listening!

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