Coronavirus Outbreak: SEBI eases compliance requirements for stock brokers, mutual funds; says closely monitoring situation in domestic market

New Delhi: In a bid to reduce compliance burden on market participants, SEBI on Monday provided various relaxations to stock brokers and mutual fund houses, including extension in deadline for submission of financial results and disclosures on commission paid to distributors. This is the latest in a series of measures taken by the watchdog in the wake of the coronavirus pandemic, which has also resulted in large scale sell-off in the domestic market. Market regulator Securities and Exchange Board of India (SEBI) also said the central government has requested states and Union Territories to keep the services of stock market entities exempted from the purview of lockdown as well as permit essential staff of the stock market participant to commute to their offices. [caption id=“attachment_4011641” align=“alignleft” width=“380”] Representational image. Reuters[/caption] According to the regulator, it is closely monitoring movements in the domestic market and has been taking appropriate measures from time to time. Also, SEBI is actively engaged with global bodies like International Organisation of Securities Commissions (IOSCO) and Financial Stability Board (FSB) at the global level, it said in a statement. Among the relaxations for brokers, SEBI said penal provision for non-collection or short collection of margins by brokers which was to be implemented from 1 April has been deferred till 30 April. However, reporting of such margins in cash and derivatives segments would continue to be done by the brokers. Further, SEBI said brokers working from designated alternate locations have been exempted from the penal provisions for not maintaining call recordings of orders or instructions received from clients till 31 March 2020. Brokers and exchanges would have to send a confirmation on the registered mobile number of the client immediately after execution of the order. The delay in submission of various reports by trading members would not attract penal provisions till 30 April. The regulator noted that brokers would be placed in risk reduction mode upon utilisation of 90 percent – instead of existing level of 85 percent – of the members’ capital towards margins. With regard to relaxation to mutual fund houses, SEBI said deadline for half-yearly disclosures of financial results have been extended by one month till May 31. For existing open-ended debt-oriented mutual fund schemes that need to comply with the revised limits for sector exposure, the deadline has been extended by one month till 1 May. Besides, guidelines on valuation of money market and debt securities based on mark-to-market valuation has been extended by one month till 1 May. Further, the timeline to hold not more than 15 percent in unlisted non- convertible debentures has been extended till 30 April. The deadline for disclosure of commission paid to distributors has been extended by one month to 10 May. Also, the yearly disclosure of investor complaints with respect to mutual funds can be done till 30 June. “The validity of SEBI’s observation letter for New Fund Offer by mutual funds has been extended by six months. Thereby, mutual funds can launch schemes within a period of one year from the date of SEBI letter,” the regulator noted. The access control presently exercised in the AMC’s (asset management company) dealing room including call recording of deals is temporarily relaxed subject to checks and balances including electronic confirmation by way of e-mail or other system having audit trail are in place, it added. Over the last few weeks, the domestic stock market has been broadly moving in tandem with the other global markets owing to concerns relating to coronavirus pandemic and the resultant fear of global economic slowdown, SEBI said. Last week, the regulator announced steps to make short-selling of stocks difficult in order to counter the market volatility. Earlier in the day, the regulator has relaxed provisions with regard to listed entities that have listed their non-convertible debentures, non-convertible redeemable preference shares, commercial papers and municipal debt securities. The issuance date for debt securities has been extended by 60 days till 31 May, the timeline for filing of large corporate initial and annual disclosures has been extended by 30 June. The SEBI has also extended the regulatory due date for filing and compliance for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InVITs) for the financial year ending 31 March, by one month over and above the timeline in the wake of the coronavirus pandemic. On Thursday, SEBI had allowed listed companies to defer disclosure of their fourth quarter earnings by 45 days till 30 June.