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Sebi Introduces Slew Of Reform Measures; To Revise KYC Norms For Foreign Investors, Slash MF Charges

The SEBI Board in its meeting yesterday unveiled a bevy of reforms for securities markets with revised KYC norms for foreign investors, reduced listing timings after public offers and slashed mutual fund charges from investors

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Unveiling more reform measures for the securities market, Sebi yesterday decided to come out with revised KYC norms for foreign investors, reduce the listing time after public offer to three days and slash the charges levied by mutual funds from investors.

In a significant move that would help deepen the commodities market, overseas entities have been permitted to trade in commodity derivatives segment subject to certain conditions. A common application form would be introduced for foreign portfolio investors seeking to enter the domestic markets.

The watchdog would put in place a revised settlement mechanism that bars wilful defaulters and fugitive economic offenders from settling proceedings. The offenders would also not be allowed to make open offers, among others.

During its meeting in Mumbai, the Sebi board also cleared proposals for mandating large listed companies to raise at least 25 per cent of their long-term borrowings through corporate bonds and levying a flat fee of Rs 1 lakh per exchange on turnover arising from agricultural commodity derivatives.

As part of bolstering the corporate governance framework, listed companies would soon be required to list out in detail complaints of sexual harassment women received in a financial year. Briefing reporters after the board meeting, Sebi Chairman Ajay Tyagi said the key decisions include revised Know Your Client (KYC) norms for foreign portfolio investors (FPIs).

According to him, the decision to cap the total expenses for investment in mutual funds would help provide 10-12 per cent gains to the investors. The regulator has decided on a major overhaul of the fee structure that mutual funds charge from investors and the mutual fund industry would have to adopt the full-trail model of commission in all schemes.

A trail-fee model benefits distributors if their clients stay invested in schemes for a longer period. At present, mutual funds pay distributors upfront commission as high as 2 per cent against the one per cent recommended by industry body Association of Mutual Funds in India (Amfi).

The time to list shares on stock exchanges after initial public offerings (IPOs)would be reduced to three days from six days at present.

Another proposal cleared by the Sebi board is introduction of Unified Payments Interface (UPI) as an alternative payment option for retail investors buying shares in an IPO.

To bolster its evidence-gathering mechanism, Sebi said it may approach the government to seek powers to intercept calls and electronic communications of those suspected of serious economic offences.