The Securities and Exchange Board of India has decided to share the KYC information available with it with entities regulated by other financial sector regulators. This is significant as it is seen as a step towards a common know-your-client in the financial sector.

“This is the first move in that direction (common KYC in financial sector), which will be investor friendly,” UK Sinha, SEBI Chairman, told reporters after a board meeting here on Thursday.

For the securities market, there is a centralised KYC system that was introduced by SEBI and currently with data of about 1.95 crore KYCs of investors.

Currently, the facility of sharing of KYC information is available only among SEBI registered intermediaries.

FSDC too discussed Sinha highlighted that regulators in the financial sector had for long been discussing the aspect of having a common KYC. The discussions happened on this issue even under the aegis of Financial Stability and Development Council, he pointed out. .

“But today, we have resolved to amend our regulations,” Sinha said adding that it won’t be mandatory but only enable information sharing with entities regulated by other regulators.

This SEBI move would further facilitate the KYC process for investors in the entire financial sector, he said.

It will reduce the paperwork and bring down the cost of operations for investors as well as intermediaries. This will also save the investors from the hassle of getting KYC done repeatedly by the intermediaries regulated by other financial sector regulators.

Employee benefit schemes The SEBI board on Thursday also gave its nod to frame a regulatory framework for employee benefit schemes involving shares of a company, in addition to ESOP and ESPS.

Such schemes would also be allowed to acquire shares from the secondary market under certain conditions so as to avoid forced dilution of capital and to be in line with international practice.

The proposed regulations intend to address issues regarding composition of trusts, facilitate secondary market acquisitions, enhanced disclosures and better enforceability.

The existing guidelines on employee stock option schemes and employee stock purchase schemes will be replaced by a new set of regulations.

The SEBI board also approved regulations on research analysts

“In India, research analysts are not regulated. So, now we are saying that all the people who are doing research reports will be regulated, there will be requirement for registration with SEBI and post-registration, they will have certain disclosure requirements,” Sinha said.

Conflict of interest The SEBI Chairman said the underlying philosophy behind this regulation is that there should be avoidance of conflict of interest.

“If somebody is doing research and somebody is also, either directly or through a group entity, buying, selling or holding particular shares, so in that case there should be avoidance of conflict of interest. That is why there needs to be disclosure.”

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