SEBI board meeting today, may ease rules for purchase of stressed assets

The Securities and Exchange Board of India (SEBI) is expected to take decisions on a number of key proposals on Wednesday, including rules to relax norms for the purchase of distressed assets, cutting the listing time for initial public offerings (IPOs) and allowing alternative investment funds to invest in commodity derivatives.

The market regulator will also review action taken in the ₹5,600-crore NSEL scam as well as provide an update on the NSE co-location investigation.

This is SEBI’s second board meeting under new Chairman Ajay Tyagi. In the first meeting, in April, the market regulator had announced sweeping changes in norms relating to mutual funds, capital raising and commodity derivatives.

According to sources aware of the agenda for the board meeting on Wednesday, one of the main proposals is to to reduce the listing time for IPOs to four working days from six.

Under existing rules, a company is allowed to list on stock exchanges six days after the close of bidding in the IPO, which is seen to be detrimental to investors as their funds are locked.

“By reducing the listing time to four days, the market regulator may want to send the right signal to investors,” the source said.

The regulator is also likely to take a view on taking further action on participatory notes. Recently, SEBI has been taking a hawkish approach in an attempt to curb the potential for money laundering through this investment route.

At the same time, foreign portfolio investors complying with global regulatory standards may get direct access to Indian stock markets without facing any procedural delay.

SEBI may also allow alternate investment funds to invest in commodity derivatives, to infuse liquidity in commodity trading. However, AIFs will not be allowed to invest more than 10 per cent of their corpus in a single commodity.

In keeping with the theme of addressing bad loans, the market regulator could ease rules of acquisition of stressed assets.

Under the current rules certain exemptions are allowed only to banks while acquiring stressed assets.

There has been a demand for the extension of these exemptions to investors as well.

One such exemption could be the waiver of the requirement for an open offer after the acquisition of a stressed asset.