The Securities and Exchange Board of India has said activities, such as processing of applications from depository participants (DPs), issuers, registrar and transfer agents (R&T), facilitating corporate actions, allotting International Securities Identification Number (ISIN) and maintaining beneficial owner data, should not be outsourced.
List of activitiesDepositories are entities that hold securities in dematerialised form and operate through a network of depository participants.
Specifying an indicative list of activities that depositories should not outsource, SEBI said the list included settlement, transfer, pledge, freezing of securities besides core IT, inspection, and surveillance and compliance functions.
The circular follows a review undertaken by the Depository System Review Committee (DSRC) of SEBI of outsourcing practices followed by depositories, and the principles outlined by SEBI’s outsourcing guidelines of December 15, 2011.
Depositories have three months to implement the circular.
In another circular, SEBI increased the per folio charges to be paid by each issuer to the depository to ₹11 from ₹8. This is subject to a minimum of ₹9,000.
To promote financial inclusion and augment the revenue source of depositories, the DSRC has mooted an incentive of ₹100 for every basic services demat account opened in cities beyond the top-15 centres.
An additional sum of ₹2 per folio per ISIN to DPs would be paid for ISIN positions held in basic services demat accounts, the DSRC said. The incentive would be given only for new accounts at the end of the fiscal and the surplus after distribution has to be deployed by depositories to incentivise the DPs for promoting financial inclusion, encouraging investors to hold MF units in demat account.
Depositories have to set aside a fifth of their incremental revenue for such incentives.