Sebi Plans Framework To Prevent Frauds By Stock Brokers

Markets regulator Securities and Exchange Board of India on Wednesday approved a slew of proposals, including ending the practice of individuals holding permanent directorship at boards of listed companies and putting in place a framework to prevent frauds by stock brokers.

The proposals were cleared by the board of the Sebi during its meeting in Mumbai on Wednesday.

Among other measures, the regulator will put in place a formal mechanism to prevent frauds and market abuse by stock brokers.

The watchdog has approved a regulatory framework to allow private equity funds to become sponsors of mutual funds, a move that will help further deepen the mutual fund industry.

Besides, the regulator has given its nod for norms for Environmental, Social and Governance (ESG) disclosures by listed companies.

Sebi said it has decided to end the practice of individuals having permanent seats at boards of listed companies. The move is part of efforts to further boost the corporate governance ecosystem.

Further, Sebi will introduce fund-blocking facility for secondary market transactions like being done for Initial Public Offerings (IPOs). The measure is aimed at safeguarding investors’ money from misuse by stock brokers.

The Sebi board has approved the broad framework for Application Supported by Blocked Amount (ASBA) like facility being made available to investors for secondary market trading. The facility is based on blocking of funds for trading in secondary market through UPI.

In the backdrop of increase in investor participation in the securities market in India, and emergence of technology aided dispute resolution frameworks, the board has also approved the proposal to harness Online Dispute Resolution (ODR) mechanism.

(With PTI inputs)

Read all the Latest Business News here