As per the recommendation of the Mutual Fund Advisory Committee (MFAC), the Securities and Exchange Board of India (SEBI) has revised the norms pertaining to minimum percentages of monthly trades to be carried out by mutual funds (MFs) on the Request For Quote (RFQ) platform of stock exchanges.
Objective: To further increase the liquidity on exchange platforms.
What is RFQ?
i.It is a platform that allows interaction amongst the market participants who wish to negotiate transactions amongst themselves.
ii.It is a participant to participant model where an initiator may request other participants for a quote in corporate bonds, Commercial papers, securitized debt instruments, municipal debt securities, Government securities, etc.
iii.It provides an electronic form of transacting in over the counter deals.
Existing Norms: In July 2020, SEBI has mandated MFs to undertake at least 10 percent of their total secondary market trades in Corporate Bonds through the RFQ platform of stock exchanges.
i.SEBI has directed MF to undertake (on monthly basis) at least 25 percent of their total secondary market trades by value in Corporate bonds and 10 percent of their total secondary market trades by value in Commercial papers by placing/seeking quotes through one-to-many mode on the RFQ platform of stock exchanges.
ii.The percentages will be calculated on the average of secondary trades by value in the immediate preceding 3 months on a rolling basis.
iii.MFs have been permitted to accept the Contract Note from the brokers for transactions carried out in One to One (OTO) and One to Many (OTM) modes of the RFQ platform.
iv.The revised norms will come into force with effect from December 1, 2021.
Note – The norms are issued in exercise of the powers conferred under Section 11 (1) of the SEBI Act 1992, read with the provision of Regulation 77 of SEBI (MF) Regulation, 1996
SEBI Modified REITs, InvITs Regulations on Exit Options
SEBI has also modified REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts) regulations with respect to exit options for dissenting unit holders in various scenarios, including acquisition and change in sponsors.
i.Different cases of Exit option: The exit option for dissenting unitholders would be available in case of an acquisition, change in sponsor, inducted sponsor or change in control of sponsor or inducted sponsor is triggered pursuant to an open offer.
ii.During those cases, the exit option price would be enhanced by an amount equal to a sum determined at the rate of 10 per cent per annum for the period between the first notice date and the second notice date.
iii.SEBI has also included the definition of ‘Relevant date’, the date of public announcement made for the acquisition in terms of Substantial Acquisition of Shares and Takeover Regulations, 2011
iv.Relevant date is the last day of voting for resolution under Regulation 22(5C) or Regulation 22(7) of the SEBI (InvIT) Regulations.
Recent Related News:
In September 2021, SEBI approved amending the existing regulatory framework for delisting of equity shares pursuant to open offer as provided under the extant Regulation 5A of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (Takeover Regulations).
About Securities and Exchange Board of India (SEBI):
Establishment – On April 12, 1992, in accordance with the SEBI Act, 1992.
Headquarters – Mumbai, Maharashtra
Chairman – Ajay Tyagi