SEBI considering multiple steps to reboot economy: Chairman Ajay Tyagi

The Securities and Exchange Board of India (Sebi) is contemplating a number of steps to reboot the economic system via monetary market reforms, the capital markets regulator’s chairman, Ajay Tyagi, stated on Wednesday.

Development of the bond markets is important to assist the Centre obtain its funding goal for the infrastructure sector, Tyagi stated on the inaugural session of the 11th version of the CII Financial Markets Summit, being held on 21-22 October.

“It will be challenging to achieve the government’s ₹100 trillion investment target for infrastructure by 2024-25 unless the bond market is adequately developed,” he stated.

The capital markets have recovered after the preliminary disruptions following the coronavirus outbreak, he stated. “We have observed that recovery has been broad-based. Not only large-caps, but mid- and small-caps have also recovered since the lows hit in March,” Tyagi stated.

The company bond market must turn into extra strong as there may be an pressing must diversify funding necessities from the banking sector, the Sebi chairman famous. “Early settlement is in everyone’s interest and we are aware about the issues around it,” he stated.

Sebi must deliver down the settlement timeline for fairness buying and selling from the prevailing T+2 to T+1 (buying and selling day) to scale back defaults by brokers. As such, the regulator has initiated talks with exchanges, clearing firms, custodians, and contributors, and has additionally met different stakeholders two weeks in the past. All of them have agreed to the proposal, barring overseas portfolio buyers (FPI), who stated it creates pointless stress on them. FPIs stated this measure will curtail buying and selling volumes within the money phase, as they require extra time for settlements, he stated. FPIs account for greater than 30% volumes within the money market.

Sebi’s reform initiatives and coverage measures have helped the working of each the first and secondary markets throughout these unsure instances, particularly for fundraising exercise, Tyagi stated.

Relaxation of the eligibility standards, fast-tracking of issuances, rationalization of disclosures, and rest of the minimal subscription necessities additionally helped the markets.

“We also introduced permanent relaxation from the pricing norms for preferential allotment by stressed companies. The relaxation was accompanied by an exemption from open offer requirement, which reduced the funding pressure on the prospective investors in such companies,” Tyagi stated.

“A well-functioning, deep and robust financial market is a must for economic development. Reform is a continuous process and is best brought in consultation with all stakeholders. Rather than believing that ‘crisis begets radical reforms’, we should continuously endeavour to keep improving our systems so that crisis, in fact, begets no radical reforms,” he stated.