Highlights of SEBI board meeting: Faster rights issue, new asset class, T+0 settlement, but mum on F&O

SEBI on Monday announced a slew of measures aimed at ease of doing business in terms of fewer disclosures, faster process for rights issues, T+0 settlement and an optional mechanism for block deals under the T+0 settlement cycle. It also announced a new asset class within the existing mutual fund framework. SEBI’s board has not announced any steps to curb speculation in retail futures and options (F&O), as expected ahead of the board meeting, but has widened the scope of the ban on insider trading regulations.

Investment strategies
The SEBI board has approved the introduction of a new investment product under the existing mutual fund framework. The new investment product aims to bridge the gap between investment funds and Portfolio Management Services (PMS) in terms of flexibility in portfolio construction. The new product will limit the spread of unregistered and unauthorized investments
schemes, which often promise unrealistically high returns and exploit investors’ expectations for better returns, SEBI said.

“The new product aims to provide investors with a professionally managed and well-regulated product that offers greater flexibility and ability to take higher risks for larger ticket sizes, while ensuring appropriate safeguards,” SEBI said.

The new product will be called ‘Investment Strategies’. The minimum investment limit for the new product is Rs 10 lakh per investor across all investment strategies of the new product in a particular AMC.

Block deal, T+0 settlement
The number of scrips eligible for trading under optional T+0 settlement will be increased in phases from 25 to the top 500 in terms of market capitalization. All registered stockbrokers can offer their investors access to the optional T+0 settlement cycle. Stockbrokers are free to charge differential brokerage for this, SEBI said.

In addition, an optional block window mechanism will be introduced under the T+0 settlement cycle as an 8:45 AM to 9:00 AM session, in addition to the existing block windows under the T+1 settlement cycle.

Faster rights issuance process

SEBI said rights issues will now be completed within 23 working days from the date the issuer’s board meeting approves the rights issue, as against the current average timelines of 317 days. This mechanism would even be faster than the preferential allocation route that takes 40 working days. SEBI said it has discontinued the current requirement of submitting a draft letter of offer to SEBI for submitting its comments. Instead, it will be submitted to the exchanges for in-principle approval. Stock exchanges would confirm that the issuer complies with LODR disclosure requirements, the SEBI note said.

SEBI said the appointment of a regulatory body will be mandatory for all rights issues, irrespective of the size of the issue, to monitor the expenditure of proceeds from the issue.

Rights issues with an issue size of less than Rs 50 crore have been brought under the purview of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. It announced a system-driven disclosure of shareholder patterns and a review of credit ratings by stock exchanges. reducing reporting requirements for listed entities. Detailed advertisement of financial results in newspapers would now be optional for listed entities, SEBI said.

Revelations
SEBI has now given three hours of additional time, instead of 30 minutes, for announcing the outcome of the board meeting that ends after trading hours. An additional time of 72 hours instead of 24 hours would be given for disclosure of legal proceedings or disputes relating to claims against the listed entity, provided such information is maintained in the specified structured digital database.

SEBI has introduced a single filing system through which listed entities can file relevant reports, documents, etc. on one exchange, which will be automatically circulated on the other exchanges.

Method of action
In addition to the current mode of trading, the stock brokers would now be required to either offer the facility of trading backed by blocked amounts in the secondary market (cash segment) using the UPI block mechanism (ASBA-like facility for the secondary market) or the 3-in-1 Trading Account facility, with effect from 1 February 2025.

Customers of the QSBs will have the choice to either continue with the existing trading facility by transferring funds to Trading Members (TMs) or opt for the facility as offered by the QSB.