SEBI cuts listing time for REIT’s InvITs from 12 days to 6 days
What is the news :
- The Securities and Exchange Board of India said the time taken for allotment and listing of REITs (real estate investment trusts) and InvITs (infrastructure investment trusts) after the closure of issue would be reduced to six working days, against the current requirement 12 working days.
- The new rules will be applicable to the public issues of REITs and InvITs which open on or after June 1, 2022, Sebi said in two separate circulars.
About REITs and InvITs:
- Both REITs and InvITs are investment vehicles similar to mutual funds, wherein sponsors/managers pool money from investors, which is further invested in real estate and infrastructure projects.
- According to an EY report released last year, REITs and InvITs have raised capital of over $4 billion in India, while the combined market capitalisation of the three listed REITs in India has surged over $7 billion. As of March 2021, 6 InvITs and 3 REITs are listed on the exchanges.
- Sebi said the move is to further streamline the process of public issues of these investment vehicles. Further, the regulator has asked self certified syndicate banks (SCSBs), stock exchanges, depositories and intermediaries to coordinate and ensure completion of listing (through the public issue), and commencement of trading of units of REITs and InvITs within six working days from the date of closure of the issue.
- In August last year, the markets regulator had amended the regulations of these two investment vehicles to enhance their reach to a larger set of investors. Sebi reduced the minimum application amount for REITs from Rs 50,000 to Rs 10,000-15,000.
- Further, the trading lot size of REITs was reduced from 200 earlier to single unit. The amendments were made to attract retail investors who restricted themselves from investing in such investment vehicles due to high entry barrier.
About SEBI:
- The Securities and Exchange Board of India (SEBI) is the regulatory body for securities and commodity market in Indiaunder the ownership of Ministry of Finance , Government of India
- It was established on 12 April 1988 and given Statutory Powers on 30 January 1992 through the SEBI Act, 1992
- Headquarters – Mumbai
- Chairman – Madhabi Puri Buch ( recently appointed)
Functions of SEBI:
The main primary three functions are-
- Protective Function
- Regulatory Function
- Development Function
1. Protective Functions
As the name suggests, these functions are performed by SEBI to protect the interest of investors and other financial participants.
It includes-
- Checking price rigging
- Prevent insider trading
- Promote fair practices
- Create awareness among investors
- Prohibit fraudulent and unfair trade practices
2. Regulatory Functions
These functions are basically performed to keep a check on the functioning of the business in the financial markets.
These functions include-
- Designing guidelines and code of conduct for the proper functioning of financial intermediaries and corporate.
- Regulation of takeover of companies
- Conducting inquiries and audit of exchanges
- Registration of brokers, sub-brokers, merchant bankers etc.
- Levying of fees
- Performing and exercising powers
- Register and regulate credit rating agency
3. Development Functions
This regulatory authority performs certain development functions also that include but they are not limited to-
- Imparting training to intermediaries
- Promotion of fair trading and reduction of malpractices
- Carry out research work
- Encouraging self-regulating organizations
- Buy-sell mutual funds directly from AMC through a broker
Objectives of SEBI:
- The objectives of the Stock Exchange Board of India are:
1. Protection to the investors
The primary objective of SEBI is to protect the interest of people in the stock market and provide a healthy environment for them.
2. Prevention of malpractices
This was the reason why SEBI was formed. Among the main objectives, preventing malpractices is one of them.
3. Fair and proper functioning
SEBI is responsible for the orderly functioning of the capital markets and keeps a close check over the activities of the financial intermediaries such as brokers, sub-brokers, etc.
SEBI’s recent committees and chairperson :
| Committee name | Chairperson |
| Alternative Investment Policy Advisory Committee (AIPAC) | Mr. N.R. Narayana Murthy Founder, Infosys Limited |
| Advisory Committee for SEBI Investor Protection and Education Fund (IPEF) | Shri. G. Mahalingam Former Whole Time Member, SEBI |
| High Powered Advisory Committee on settlement orders and compounding of offences | Mr. Justice (Retd.) Jai Narayan Patel Former Chief Justice, Hon’ble Calcutta High Court |
| Market Data Advisory Committee (MDAC) | Dr. M. S. Sahoo |
| Corporate Bonds and Securitization Advisory Committee (CoBoSAC) | Mr. G Mahalingam Former Whole Time Member, SEBI |
Recent news About SEBI:
Sebi comes out with guidelines for KYC Registration Agencies
- Capital markets regulator Sebi issued fresh guidelines for KYC Registration Agencies (KRAs) whereby such agencies will have to independently validate KYC records of all clients from July 1.
- The move comes after Sebi, in January, notified new norms to make KRAs responsible for carrying out independent validation of the KYC records uploaded onto their system by Registered Intermediaries (RIs).
New guidelines :
- Under the notified rules, such agencies will have to maintain an audit trail of the upload/modification/download with respect to KYC records of clients.
- In a circular, Sebi said KRAs will independently validate records of those clients (existing as well as new) whose KYC has been completed using Aadhaar as an Officially Valid Document (OVD).
- The records of those clients who have completed KYC using non-Aadhaar OVD will be validated only upon receiving the Aadhaar number.
- The validation of all KYC records (new and existing) shall commence from July 1, 2022,” the Securities and Exchange Board of India (Sebi) said.
- According to the regulator, clients whose KYC records are not found to be valid by KRA after the validation process will be allowed to transact in securities market only after their KYC is validated.
- The regulator has put in place the additional guidelines on KRAs in order to implement the regulations effectively.
- KRAs will continue to act as repository of KYC data in the securities market and will be responsible for storing, safeguarding and retrieving the KYC documents.
- During the process of validation, KRAs will validate details pertaining to Aadhaar through Unique Identification Authority of India (UIDAI) authentication, PAN using the Income Tax database and mobile number and e-mail ID using one-time password validation.
- This is applicable only in cases where mobile number and e-mail ID provided by client are not seeded with Aadhaar.
- The KRAs will develop systems/mechanism, in consultation with SEBI and in co-ordination with each other.
- It will follow uniform internal guidelines detailing aspects of identification of KYC attributes and procedures for KYC validation.
- The systems of RIs and the KRAs will be integrated to facilitate seamless movement of KYC documents.
- KRAs will promptly inform the respective RIs of deficiency/inadequacy in client’s KYC documents, if any, that is observed for validation.
- On successful completion of KYC validation, Sebi said that a unique client identifier called KRA identifier will be assigned by KRA to the client.
- Such a KRA identifier may be used by the client for opening of account with any other intermediary, without repeating the KYC process.
- The KYC records of new clients, who have used Aadhaar as an officially valid document, will be validated within two days of receipt of KYC records by KRAs.
- The records of all existing clients will be validated within a period of 180 days from July 1.
- KRA will have to intimate about the KRA identifier to the client within two working days of receipt of KYC records.
- This has to be done by post or e-mail, and the KRA concerned will have to maintain the proof of dispatch.
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