Regulations
SEBI to strengthen surveillance system

SEBI has begun a process to rope in an IT service provider for monitoring of its integrated market surveillance system network through a network monitoring centre that would operate on a 24x7 basis

New Delhi: With an aim to deploy latest technology and know-how to tackle ever-changing nature of threats to investor interest, market regulator Securities and Exchange Board of India (SEBI) is looking to overhaul its market surveillance and network monitoring systems, reports PTI.

 

In this regard, the capital markets regulator SEBI has begun a process to rope an IT service provider for monitoring of its integrated market surveillance system (IMSS) network through a network monitoring centre that would operate on a 24x7 basis.

 

The IT service provider would be contracted by SEBI for a period of three years, which can be later extended for six years, a senior official said.

 

SEBI undertakes its market surveillance functions through IMSS, which went live in 2007 and collects data for suspicious market activities through multiple sources, including its network systems at stock exchanges and depositories.

 

The IT service provider would need to monitor this network on a daily basis and would be required to have a highly competent Security Monitoring Operations Centre, which would operate on a 24/7 basis.

 

This Security Monitoring Operations Centre would be used for remote monitoring of security and surveillance infrastructure of IMSS, provide periodic security status reports to SEBI and real-time status reports through an online facility, and propose changes in light of latest security best practices and latest security threats.

 

SEBI would consider only those companies for the job that have been in the business for at least ten years, have had a minimum net worth of Rs100 crore in last three years and a workforce of 25,000 personnel or more.

 

The service provider would need to deploy its qualified resident engineers at SEBI's IMSS data centres, as also for managing various other network systems.

 

The move is aimed at helping SEBI in its efforts towards a stronger continuous monitoring of manipulation attempts in the stock market and analysis of daily transaction data.

 

The IMSS system has also proved very useful in situations of high volatility, and the times when the attention is mostly focussed on major market-moving developments.

 

The market manipulators tend to be more active in these situations, thinking that the oversight machinery would be mostly focussed on monitoring issues like risk-management systems and proper settlement of payment obligations.

 

However, the IMSS keeps working on an auto-pilot like basis and an upgraded system would further help in the surveillance activities of the regulator.

 

The system collects transaction and master data from stock exchanges and depositories on a daily basis to generate alerts for predefined market manipulation scenarios.

 

It also provides data analysis and benchmarking tools, which are used in various policy decisions of the SEBI.

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SEBI board to talk IPO safety net; minimum public holding

On 18th January, SEBI board would discuss the issue of safeguarding a part of funds invested by small investors in IPOs and the steps required for dealing with the promoters failing to comply with minimum public shareholding in listed companies

New Delhi: Market regulator Securities and Exchange Board of India’s (SEBI) board will discuss this week safeguarding a part of funds invested by small investors in initial public offerings (IPOs), as also the steps required for dealing with the promoters failing to comply with minimum public shareholding in listed companies, reports PTI.

 

The board of SEBI is scheduled to meet on 18th January, wherein it may also discuss two high-profile corporate cases—one involving refund of investors’ money by Sahara group and the other about Reliance Industries (RIL)'s appeal against its decision on settlement of cases through consent mechanism, a senior official said.

 

Mukesh Ambani-led RIL has approached Securities Appellate Tribunal (SAT) against SEBI with regard to the regulator's decision to reject its plea to settle an alleged insider trading case through consent mechanism.

 

Under the consent mechanism, the ongoing investigations by SEBI can be settled after payment of certain charges and the ill-gotten gains, if any, without admission or denial of wrongdoings by the concerned entities. However, SEBI changed its consent framework regulations in May 2012, pursuant to which it found many applications, including those of RIL, unsuitable for settlement through this mechanism.

 

RIL's appeal before SAT was earlier scheduled for 3rd January, which was first adjourned till 11th January and thereafter to 24th January after SEBI sought time to study the petition.

 

In the Sahara case, SEBI has been asked by the Supreme Court to facilitate refund of thousands of crores of money collected by two group companies from close to three crore bondholders.

 

While SEBI will update its board about these two cases at the next meeting, it is expecting an approval to the final norms for a proposed “mandatory safety net mechanism” in IPOs, on which it floated a discussion paper in September and had sought public comments till 31 October 2012.

 

Besides, SEBI would also discuss the issues surrounding the deadline for meeting minimum public shareholding of 25% by the private sector companies by June 2013 and that of 10% by PSUs by August this year.

 

Promoters of nearly 190 companies are yet to bring down their shareholding to desired level to meet the guidelines, although SEBI has already provided various options to meet these guidelines. SEBI board may discuss further steps needed for helping the companies meet the norms, as also the measures to be taken against the non-compliant entities.

 

Under the proposed “safety net” norms, SEBI has said that the companies making IPOs could be asked to mandatorily refund the money to small retail Indian investors, if the price of the shares plunge by more than 20% within three months of listing.

 

The safety net would be applicable for those resident retail individual allottees applying for shares worth up to Rs50,000, while the total obligation on the companies would be capped at 5% of the IPO size.

 

Further, the 20% fall in share price would be considered over and above the general fall, if any, in one of the two broader market indices, BSE-500 or S&P CNX 500.

 

The proposal was first discussed by SEBI's board on 16th August, but it was felt that a wider public discussion was needed.

 

The proposal is aimed at helping boost investor sentiments, as also to help bring sanity in IPO pricing by the companies and their merchant bankers. It has been proposed that the companies can pass on the liability for “safety net” payments to their merchant bankers.

 

SEBI mooted the proposal after it found that the shares were trading below their public offer price even after six months of listing in more than 60% cases, while the decline was of more than 20% in a majority of IPOs.

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Infosys ups exposure in debt mutual fund to record high

Infosys’ investments in debt MFs increased during the December quarter even as its total cash chest remained almost unchanged at Rs22,501 crore

New Delhi: The country’s most cash-rich IT company Infosys has ramped up its investments in debt mutual funds (MFs) to an all-time high of Rs7,365 crore, while paring its bank deposits to the lowest level since June 2010, reports PTI.

 

The tech major's investments in debt MFs increased during the last quarter ended 31 December 2012, even as its total cash chest remained almost unchanged stood at Rs22,501 crore from the previous quarter level.

 

After rising sharply in the July-September 2012 quarter to Rs4,986 crore, Infosys’ investments in debt-focussed liquid MF schemes rose even further to Rs7,365 crore as on 31 December 2012.

 

Large corporates use liquid debt MFs to park cash for short-term and also earn good returns, while waiting to deploy the funds for future projects.

 

At over Rs7,000 crore, Infosys’ current investment level in liquid mutual funds is the highest-ever for the debt-free firm. The previous record high level for its exposure to liquid MFs was Rs5,200 crore in December 2009, data shows.

 

On the other hand, Infosys’ bank deposits fell from Rs14,569 crore as on 30 September 2012, to Rs11,943 crore at the end of December, as per the latest quarterly financial accounts. This excludes funds in current accounts.

 

At the current level, Infosys’ money in bank deposits is at the lowest level since Rs11,732 crore as in June 2010.

 

Liquid mutual funds are estimated to have given a three-month return of 1.5-2.5% in December quarter.

 

Besides liquid MFs offering better yields than bank deposits, the fall in bank deposits could also be due to Infosys’ Rs2,000-crore Lodestone buy-out, experts said.

 

The company considers all highly liquid investments with a remaining maturity at the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalents.

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