Two years of RERA: Implementation still patchy in many states
Two years after the Real Estate (Regulation and Development) Act was enacted, the implementation of the legislation intended to bring about transparency and regulate the highly unorganised real estate sector still remains a work in progress.
 
The RERA rules have been notified in 22 states and six union territories, and among them 19 states have active online portals so far. 
 
Five states have not yet notified the rules and 11 states - all the eight northeastern states as well as West Bengal and Kerala - are yet to set up their web portals. 
 
Several states have also diluted the rules in favour of the builders, going against the very spirit of the Act, experts said.
 
"Undoubtedly, it is work in process, with the states currently placed across the spectrum of RERA implementation. On the one hand, Maharashtra and Madhya Pradesh have taken the lead and are markedly ahead, while Haryana and Bengal on the other, have still to catch up," said Gulam Zia, Executive Director for Valuation and Advisory, Retail and Hospitality at Knight Frank India.
 
West Bengal has refused to implement the Act as it has its own West Bengal Housing and Industrial Regulation Act (WBHIRA). This has, however, been challenged in the Supreme Court by the Forum for People's Collective Efforts (FPCE), an umbrella association of home buyers.
 
"The implementation of RERA has had its fair share of glitches delaying its full implementation. Many states haven't been able to get the whole system activated. As a result, aggrieved consumers are not yet fully convinced about the authority," Zia added.
 
According to Surendra Hiranandani, Founder and Director of House of Hiranandani, although the Act has brought about significant changes, the biggest probalem of RERA is that of granting permissions. 
 
"We must have a single-window disbursal of all regulatory approvals which has been a long-standing demand of the real estate sector as it will help developers complete projects on time," he said.
 
Experts also raise concern about the Act being ineffective in some fronts, including regulation of old projects.
 
"I believe RERA is effective when it comes to new projects. But for the old projects, I would still consider RERA a toothless tiger," said Samir Jasuja, Founder of Propequity, adding that RERA also lacks effective infrastructure. 
 
"There is no team on ground who would audit or validate the data provided by the developers. Some sales numbers reported on the RERA website are not correct and there is no proper mechanism to cross check it," he added.
 
Although there are loopholes and the implementation has been patchy, analysts and market players feel RERA has brought about a systemic change in the real estate sector which has also boosted the sentiments among home buyers.
 
"In the last two years, RERA has brought in some amicable change in the sector. Some of the changes we've seen in the sector are increasing joint ventures, developers registering their projects, timely hand over of flats and developers bringing in newer projects with cleaner business practices. All of these improvements have led to a boost in home buyer sentiments," said Parth Mehta, MD of Paradigm Realty.
 
According to J.C. Sharma, Vice Chairman and MD, SOBHA Ltd, the implementation of RERA, has been one of the most significant and transformative steps for Indian real estate sector. With regulatory mechanism in place, the consumers' grievances can now be resolved faster, he said.
 
The Act has enabled the developers to understand their responsibility and work within their competencies and as a result, they are increasingly becoming realistic in offering the right products at the right price point, Sharma said. 
 
"Despite the initial transitional challenges, the positive impact has been amply visible over the last two years with improving home buyer sentiments and increasing transparency and accountability in the sector," he added.
 
Anuj Puri, Chairman of Anarock Properties said that although several buyers are concerned about the dilution of the RERA rules, they continue to have faith in the law.
 
"Even while buyers have been continuously fretting about the dilution of the rules, they are bestowing their faith in the law and coming forward in bulk to raise their complaints against faulty developers for myriad reasons including project delays. For instance, Maha RERA has received as many as 6,631 complaints (as on April) since inception, out of which the state authority claims to have disposed more than 64 per cent of the complaints," he said.
 
Maharastra has been the torchbearer in terms of implementation of the Act and resolving home buyers' grievances. 
 
According to Anarocks, Maharashtra is currently the most active state having the highest project registrations with more than 20,718 projects under MahaRERA so far, and nearly 19,699 RERA-registered real estate agents.
 
However, the lagging of other states in terms of having a fully operational RERA structure with an operational website still remains concern, experts said.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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SEBI Allows OPG Securities, Way2Wealth and GKN Securities to Close Positions in F&O & Currency Derivatives in Two Months
Market regulator SEBI has relaxed its order issued against OPG Securities Pvt Ltd and its three directors in the National Stock Exchange (NSE) algo scam case to allow the broker close its open positions in the futures and options (F&O) and currency derivatives segment. In a similar order, SEBI also allowed Way2Wealth Brokers Pvt Ltd and GKN Securities to close their open positions in F&O and currency derivatives segment in two months.
 
In an order issued on Friday, G Mahalingam, whole time member of SEBI, stated, "...directions issued vide the final order shall stand relaxed for the limited purpose of allowing the noticees to close the open positions in the futures and options and currency derivatives segments of OPG Securities Pvt Ltd on or before the expiry date of the respective contracts or within a period of two months from 30 April 2019, whichever is earlier."
 
In a separate but similarly worded order, Way2Wealth Brokers and GKN Securities were also allowed to close their open positions in F&O and currency derivatives within two months.
 
Earlier this week, SEBI has barred OPG Securities and its directors Sanjay Gupta, Sangeeta Gupta and Om Prakash Gupta from the markets for five years for securing unfair access to NSE’s trading systems. They were also asked to pay Rs15.57 crore along with an interest of 12% from April 2014 onwards. 
 
Both Way2Wealth Brokers Pvt Ltd and GKN Securities were barred by SEBI for one year from accepting any new client.
 
However, the brokerages approached SEBI pointing out their open position in the F&O and currency derivatives segments at the end of trading on 30 April 2019, which it needed to be closed.

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NSE Algo Scam: SEBI Says Ajay Shah, Suprabhat Lala & Their Wives ‘Commercially Exploited’ Confidential Data
In two separate orders in the Algo-scandal investigation, the Securities and Exchange Board of India (SEBI) has indicted well-known market economist Ajay Shah and Suprabhat Lala, a senior official of the National Stock Exchange (NSE).
 
The order says a private firm of Sunita Thomas (Mr Lala’s wife and sister-in-law of Ajay Shah), 'commercially exploited' confidential data obtained from the NSE for writing algo trading software. 
 
SEBI has directed NSE to take legal action against Mr Shah, Ms Sunita Thomas, her firm Infotech Financial Services Pvt Ltd, and Krishna Dagli,  director of the company.
 
One of the orders indicts, Ravi Narain and Chitra Ramakrishna, both former managing directors (MD) of NSE overlooking conflict of interest in awarding contract to Infotech Financial. The orders bring out in great detail the close relationship that Dr Shah enjoyed with the NSE group. Dr Shah has worked with the finance ministry and been associated with high level policy committees. 
 
The order by SK Mohanty, whole time member of SEBI, said, “Ajay Shah and other noticees have collusively worked to fulfil their commercial goals by fraudulently using the data that was obtained by them from NSE to develop algo trading software. Keeping in line with the regular business of Infotech Financials Pvt Ltd, i.e. providing algo trading software to traders in securities, the algorithmic trading software so developed from liquidity index (LIX) data was meant to be sold to the traders or brokers in the market to induce them to trade in securities with better trading results, on the strength of capability of such algo trading software prepared out of such exclusive data not ordinarily available to other market participants.” 
 
“Further, Suprabhat Lala being a senior official of NSE ought to have displayed professional integrity by disclosing to the senior management his connection with Infotech Financials through his wife i.e. Sunita Thomas, which had a strong cause to give rise to a conflict of interest to him as well as to Ajay Shah. Moreover, by sharing internal information and data about NSE and the minutes of technical advisory committee (TAC) with his wife (Sunita Thomas) who was a beneficiary party of the LIX project, Suprabhat Lala has committed breach of his duties to collude with other noticees for the aforesaid fraudulent acts,” the order says.
 
A separate order, also passed by Mr Mohanty, says Mr Shah, Infotech Financial and the company’s two directors worked on a pre-planned scheme to obtain data from NSE for using to develop a software for algo trading. 
 
“...the LIX project was itself conceived by Mr Shah to which NSE and its senior officials agreed because of the implicit advantages of having a LIX on the exchange platform. Similarly, it was Mr Shah, who was instrumental in getting the LIX project awarded to Infotech. As far as Mr Shah, Mr Narain and Ms Ramakrishna are concerned, there is no evidence found from the records to suggest that they were aware about the hidden agenda of Mr Shah and his intentions behind the LIX project although all the three noticees are certainly liable for not taking any precaution or checking the antecedents of Infotech, as algo software vendor in the securities market and thereby have not ensured any fairness and transparency nor have they looked at the possible conflict of interest at the time of awarding the contract," the order says.
 
In fact, the order mentions about an email sent by Mr Shah to Sunita Thomas that revealed how the trading data obtained from NSE was being used for developing algorithm trading product for the securities market. 
 
 
The SEBI order mentions, “Mr Shah held a position of high esteem and influence in the minds of the senior management of NSE, as evident from the statement of Ravi Narain, former MD and CEO of NSE. Mr Shah was capable of influencing the decision making of NSE management, which is exemplified by the fact that he and his wife suggested to NSE and NSE undertook the LIX project for which the Infotech Financials was awarded the contract.” 
 
 
Mr Shah is married to Susan Thomas, the sister of Sunita Thomas, who is director of Infotech Financial. However, in what could have been a criminal conspiracy worthy of celluloid screen, Mr Shah along with some of his immediate family members created a virtual family enterprise and used their connections with NSE officials to gain a computing contract for LIX. Mr Lala, who is married to Sunita Thomas, had at various times headed NSE’s vigilance, compliance, trading and customer relations.
 
“In my view,” Mr Mohanty from SEBI says, “there is no difficulty in sharing of data by Mr Shah with an outside entity for commercial purpose as long as the agreement spells out clearly its objectives and provides for the commercial terms and conditions in the agreement in compliance with the stated data sharing policy of the exchange. However, when a data sharing agreement purely meant for research purposes assumes the colour of a commercial agreement thereby providing privileged access to confidential and exclusive trade data of the exchange to a select few persons who, clandestinely exploit the said data for their commercial gains, it leads to serious issues leading to compromise on market integrity.”
 
Mr Shah has been long associated and actively engaged with NSE and several subsidiaries of the Exchange. In fact, Mr Shah and his wife Susan were the only two academicians with deep access into the NSE. They received trading data from the NSE, first, in their personal capacity and, later, as academics associated with Indira Gandhi Institute of Development Research (IGIDR). 
 
In his sworn testimony, Mr Shah had admitted that IGIDR often sub-contracted work to Infotech Financials, recommended its services and also shared data with it. 
 
Further, SEBI says, “evidently Mr Lala from the NSE has committed professional compromise by sharing internal data or information with Ms Thomas through the emails referred to at Para-16 of the SCNs and also by accepting invitation from Mr Shah to discuss high-frequency trading (HFT) at NSE at an outside venue in the presence of other Noticees. This leads one to believe that Mr Lala was actively associated with Mr Shah and Ms Thomas and her company, Infotech Financials in their professional activities.”
 
After examining relevant provisions of the Professional Service Agreement, at para no. 47, signed by Infotech Financials with NSE, the market regulator found that the data received by the company from NSE was confidential and exclusive in nature, which was made available only to the Mr Shah and two directors, Ms Thomas and Krishna Dagli.
 
Infotech Financials and its two directors have been in the active business of providing trading solutions to the market participants on algorithmic trade through various products. 
 
SEBI says, “The convergence of interests of all the noticees in receiving the data, which was confidential and exclusive in nature, is borne out from the fact that Mr Shah in his own emails has acknowledged its confidential nature and also the fact that he along with other noticees was involved in using the said confidential data for developing algo trading software for sale to traders in the securities market”. 
 
“This is certainly not a desirable situation as it leads to violation of principles of transparency, equity and fairness in dealing with market participants by the Exchange, which is not permissible under the regulations. Under the circumstances, the acts attributable to the noticees for the reasons recorded and observations made in the foregoing paragraphs of this order, are clearly violative of the various legal provisions, as alleged in the SCNs and the noticees are liable to be held accountable for the acts and the breach of law committed by them,” the order passed by Mr Mohanty says.
 
SEBI has barred Mr Shah for two years from holding any position with any market participant entity. It also restrained Infotech Financials and its two directors, Ms Thomas and Mr Dagli from providing any service or be associated with any market players over the next two years. 
 
Mr Lala from NSE is also barred from holding any position with any market infrastructure intermediaries for two years.
 
Mr Mohanty, in his separate order, also directed NSE to review all its third party agreements having a data sharing component, to prepare a detailed documented policy and data usage and sharing and get it approved from the board of the Exchange.
 
Mr Narain and Ms Ramakrishna, are barred from holding a position for two years with any market intermediaries.  
 
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