In order to strengthen its investigation and enforcement mechanism, SEBI was on planning to set up a mechanism to incentivize people having personal knowledge of insider trading cases and report the same to the watchdog.
It was proposed by SEBI to reward of up to Rs 1 crore if any informant provides any information on insider trading in the stock market.
Now, On Wednesday, Market regulator Securities and Exchange Board of India (SEBI) confirmed the proposed announced of reward of up to Rs 1 crore to whistleblowers.
SEBI said, the monetary reward shall be given for cases in which the whistleblower’s information leads to a disgorgement of at least Rs 1 crore and the total amount of monetary reward will be 10 per cent of the monies collected, or a maximum of Rs 1 crore.
“An interim reward not exceeding Rs 10 lakh may be given at the stage of issuance of the final order by the SEBI against the person directed to disgorge,”
Companies will now have to give consent to rating agencies for bank loan details also.
The proposed amendments to the SEBI (Prohibition of Insider Trading) Regulations, 2015 will provide “near absolute confidentiality along with appropriate safeguards”, and help in strengthening the mechanism for early detection of insider trading and better enforceability.
The aim of regulation is to curb insider trading to protect the interest of investors at large and it defines ‘insider trading’ as trading of securities while in possession of unpublished price sensitive information.
Market watchdog simplified operational constraints and compliance requirements for foreign portfolio investors (FPIs).
The purpose behind such development is that the foreign investors has turned net seller in the Indian capital markets.
As per the latest depositories data, FPIs pulled out a net Rs 3,758 crore from the Indian capital markets in July on account of multiple headwinds, including the super-rich tax announced in Budget 2019-20.
Foreign investors had gone on a selling spree in the Indian stock market after Finance Minister Nirmala Sitharaman in her maiden Budget 2019 speech proposed a hike in surcharge for the super-rich (non-corporate) from 15% to 25% for incomes between Rs 2 crore and Rs 5 crore, and from 15% to 37% for higher incomes.
Sebi has done away with the broadbased eligibility criteria for FPIs, simplified documentation requirements for KYC and reduced the eligibility categories for FPIs to 2 from 3 at present.
The SEBI board also approved the proposals regarding buy-back of securities, continuing with the current approach of allowing buybacks if post buy-back debt to equity ratio is not more than 2:1 (except for companies for which higher debt to equity has been notified under the Companies Act, 2013) based on both standalone and consolidated basis.
In order to enable credit rating agencies to have timely information on the default of an entity, SEBI has allowed them to obtain details of borrowings and defaults by companies.