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Sebi's Steps Towards Regulatory Simplification

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SEBI initiated a review of financial sector regulations, seeking stakeholder input for simplification and compliance improvement. The focus areas include related party transactions, material event disclosures, rumour verification, and ESG assurance. Working groups and an industry standards forum aim to provide guidance on complex concepts, fostering collaboration between regulators and entities.

Sebi initiated a comprehensive review of regulatory frameworks in the financial sector. The budget speech for FY2023-24 highlighted the need for simplification and ease of compliance.

Public Consultation and Stakeholder Participation

Sebi, in line with the budget proposal, invited suggestions from stakeholders regarding the simplification of frameworks. A press release on 4 October outlined the review of 25 regulations covering listing, takeover, intermediaries, and market infrastructure institutions. The formation of 16 working groups under standing advisory committees for a detailed review of compliance requirements.

Focused Areas for Simplification

Sebi identified areas requiring simplification, with a specific focus on related party transactions, disclosures of material events, rumour verification, and ESG assurance. The industry standards forum was initiated to standardize practices in these areas.

Guidance Mechanism for Compliance

Recognizing the complexity of certain regulations, Sebi established an industry standards forum to offer guidance. Regulated entities are encouraged to participate in the consultation process, akin to a collaborative doctor-patient relationship.

Clarity and Guidance on Complex Concepts

Acknowledging the complexity of concepts like 'related party transactions,' Sebi seeks to provide further clarity rather than immediate simplification. Emphasizing the need for guidance to ensure ease of compliance, particularly in interpreting the purpose and effect of transactions benefiting related parties.

Automation of Disclosures

Sebi considers the automation of disclosures, following the system-driven disclosures in takeover regulations and prohibition of insider trading regulations. Potential implementation of real-time intimation of offline investor complaints for consolidated and automated disclosures on the overall status of investor grievances.

Centralized Mechanism for Rumour Verification

Proposal for a centralized monitoring mechanism for rumour verification to streamline the process and minimize efforts required from companies. Aiming to enhance efficiency in handling and verifying market rumours.

Clarity in Material Events Disclosure

Emphasis on bringing clarity to the disclosure of material events, especially actions taken and orders passed by authorities, without applying materiality thresholds.

Master Circular Updates

Sebi's consideration of updating master circulars with each change to circulars to facilitate ease of reference for market participants. This aligns with Sebi's commitment to prompt updates and ensuring the accessibility of regulatory guidelines.