Contents

1 Finance News of July 2020.................................................................................................................................... 5

1.1 MoU signed between CBDT and SEBI ....................................................................................................... 5
1.2 MCX gets SEBI approval to launch Gold Mini Options.............................................................................. 5
1.3 ADB raises $4 billion via bonds to help nations fight coronavirus ........................................................... 5
1.4 NSE approves Indian Gold bars to settle futures contracts ...................................................................... 5
1.5 SEBI asks investment advisors to choose between sale or advise ........................................................... 6
1.6 NCDEX raises compensation limit to Rs 5 lakh from investor protection fund ........................................ 6
1.7 SEBI issues guidelines curbing the practice of margin trading ................................................................. 6
1.8 NSE-backed CAMS gets SEBI nod to float IPO .......................................................................................... 6
1.9 SEBI allows no trading window curbs on OFS........................................................................................... 7
1.10 India announces 400 million dollar currency swap for Sri Lanka ............................................................. 7
1.11 NSE starts trading of T-bills, SDLs in capital markets segment................................................................. 7
1.12 Diginex launches new Singapore cryptoexchange ahead of Nasdaq ....................................................... 7
1.13 SEBI issues guidelines curbing the practice of margin trading ................................................................. 8
2 Finance News of August 2020 .............................................................................................................................. 8
2.1 RBI permits banks to invest in debt instruments through mutual funds ................................................. 8
2.2 SEBI to set up virtual museum of securities market ................................................................................. 9
2.3 RBI to set up innovation hub for financial inclusion, efficient banking ..................................................10
2.4 SEBI asks proxy advisors to formulate voting recommendation policies ...............................................11
2.5 Paytm Money goes live with stockbroking services on its platform ......................................................11
2.6 Sebi decides to decentralise portfolio managers registration work ......................................................11
3 Finance News of September 2020 ......................................................................................................................11
3.1 SEBI modifies mutual funds portfolio segregation norms amid Covid-19..............................................11
3.2 CCEA allows PGCIL to monetize its assets by InvIT .................................................................................12
3.3 SBI Mutual Fund unveils Magnum Children’s Benefit Fund ...................................................................12
3.4 Union Bank plans to raise Rs 2,000 crore by issuing Tier-II bonds .........................................................13
3.5 SEBI details operating guidelines for PMS in IFSC ..................................................................................13
3.6 SEBI tightens grip on board composition at market infra institutions ...................................................13
3.7 Parliamentary panel bats for abolishing LTCG on startup investments .................................................14
3.8 RBI issues draft on rupee IR derivatives .................................................................................................14
4 Finance News of October 2020 ..........................................................................................................................14
4.1 RailTel files draft red herring prospectus for ₹700 crore IPO .................................................................14
4.2 Credit ratio of Indian companies at decadal low in April-September 2020 ...........................................15
4.3 SEBI releases framework to monitor foreign holding in depository receipts ........................................16
4.4 SEBI slaps Rs 6-crore penalty on NSE for investing in 'unrelated' business ...........................................16
4.5 Don't take Covid-related delays in payment as default: SEBI to MF valuation agencies .......................17

1|P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241

 4.6 CRISIL launches Indices for Alternative Investment Funds.....................................................................17
4.7 Bilateral Netting law becomes operational from October 1 ..................................................................18
4.8 SEBI introduces “very high-risk” category in mutual fund schemes ......................................................19
4.9 Private equity investments hit record high of $28.66 billion in 2020 ....................................................19
4.10 SEBI shields small investors from AT1 bonds, urges 'full discretion' ......................................................20
4.11 India's first B2B crypto trading exchange 'DigitX' starts operations ......................................................21
4.12 SEBI comes out with uniform time period for listing of securities .........................................................21
4.13 SEBI Circular on Mutual Fund Dividend Options ....................................................................................22
4.14 Govt's social stock exchanges proposal may face disclosure roadblock ................................................22
4.15 CLP Wind Farms (India) raises ₹297 crore via green bonds ...................................................................23
4.16 SIP inflows drop for sixth month in September 2020.............................................................................24
4.17 IFSCA issues regulatory framework for market access via authorised persons .....................................24
4.18 SEBI amends debenture trustee norms to protect interests of investors ..............................................24
4.19 Centre to ask at least eight PSUs to consider buy-backs ........................................................................25
4.20 IFSCA prescribes regulatory framework for REITs and InvITs.................................................................25
4.21 MCX launches futures trading in base metals index ..............................................................................26
4.22 BSE joins hands with Telangana govt to help MSMEs raise equity funds ..............................................27
4.23 SEBI releases guidelines for utilization of fund created for farmers, FPOs ............................................27
4.24 SEBI constitutes panels to suggest policy for securities market data ....................................................27
4.25 SEBI bans Birla Pacific Medspa, Yashovardhan Birla, 8 others for 2 years .............................................28
4.26 SEBI fines ₹ 65 lakh on 13 entities for manipulative trades ...................................................................28
4.27 LIC IPO may spill over to next fiscal ........................................................................................................28
4.28 SEBI's role in Franklin Templeton crisis draws anger of Karnataka HC ..................................................28
5 Finance News of November 2020.......................................................................................................................29
5.1 Abu Dhabi's SWF becomes first notified Fund to get 100% IT exemption .............................................29
5.2 SEBI issues guidelines for rights issue by unlisted InvITs to raise funds .................................................29
5.3 Swiggy announces ESOP liquidity programme .......................................................................................29
5.4 NSE to launch first agricultural commodity futures contract .................................................................29
5.5 SEBI introduced new flexi cap category in mutual funds .......................................................................30
5.6 CCI approves transfer of 100% shareholding of Sinochem Group Company Limited ............................30
5.7 Sensex, Nifty soar to lifetime highs as Samvat 2077 gets off to bright start ..........................................30
5.8 SEBI’s dual settlement cycle faces opposition ........................................................................................30
5.9 RailTel gets SEBI's go-ahead to float IPO ................................................................................................31
5.10 SEBI set up an expert group to review the framework of share-based employee benefit and issue of
sweat equity ...........................................................................................................................................................31
5.11 12 Indian stocks to get included into MSCI index and two will be removed..........................................31
5.12 BSE signs MoU with premier bullion trade associations across India ....................................................31

2|P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241

 5.13 SEBI directs open-ended debt MFs to maintain 10% liquidity buffer ....................................................32
5.14 SEBI releases framework for limited purpose clearing corporation.......................................................32
5.15 NCDEX rolls out initiative to encourage FPOs to trade in options in goods ...........................................33
5.16 BSE StAR MF launches direct investment portal for corporates ............................................................33
5.17 India's G-secs one of most developed among emerging markets: RBI study.........................................33
5.18 RBI panel proposes to raise promoters cap to 26% in private banks .....................................................34
5.19 SEBI proposed to reduce the minimum offer size in an IPO ..................................................................35
5.20 NSE Academy acquiring TalentSprint .....................................................................................................35
5.21 Mutual funds add 4 lakh folios in Oct; total tally at 9.37 crore ..............................................................35
5.22 India INX inks pact with Luxembourg Stock Exchange to develop green finance ..................................36
5.23 SEBI targets analyst meets, proposes steps to curb information asymmetry ........................................36
5.24 SEBI proposes rationalizing existing timelines for delisting process ......................................................36
5.25 NSE, BSE declares Karvy Stock Broking as defaulter, expels from membership ....................................37
5.26 SEBI launches SMARTs program to strengthen investor education framework ....................................37
5.27 SEBI amends guidelines on preferential allotment by listed InvITs........................................................38
5.28 SEBI eases restrictions placed to curb Covid-induced volatility .............................................................38
5.29 Mid, small cap mutual funds top equity categories with upto 59% returns in 1 year ...........................38
5.30 SEBI asks NSE to increase IPF corpus, implement SOP to process investors..........................................39
5.31 NSE declares Anugrah Stock and Broking as defaulter...........................................................................39
5.32 RBI issues another marquee 10-year bond, making it third this calendar .............................................40
6 Finance News of December 2020 .......................................................................................................................40
6.1 NTPC offers to buy back Masala bonds worth ₹4,000 cr .......................................................................40
6.2 NSE launches its first agricultural commodity futures contract CDSO ...................................................41
6.3 SEBI eases compliance norms for brokers and Depository Participants ................................................41
6.4 MCX gets Sebi approval for launch of futures trading in natural rubber ...............................................41
6.5 Lucknow Municipal Corporation raises Rs 200 crores on BSE muni bond listing ...................................42
6.6 Highlights of the 4th Bi-Monthly Monetary Policy ..................................................................................42
6.7 SEBI issues guidelines for transfer, dematerialization of re-lodged physical shares..............................43
6.8 Cabinet approves the proposal of SEBI to sign Bilateral MoU between India and Luxembourg ...........43
6.9 AIFs can leverage without limits in IFSC .................................................................................................43
6.10 IFSCA notifies International Financial Services Centres Authority (Bullion Exchange) Regulations, 2020
44
6.11 SEBI bars entities from securities market for unauthorized investment advisory activities..................44
6.12 Burger King India makes remarkable market debut; shares jump over 92% .........................................45
6.13 NSE to launch derivatives contracts on Nifty Financial Services index ..................................................45
6.14 Bombay Stock Exchange launches e-agricultural spot market platform ................................................45
6.15 SEBI to have department to check price manipulation, misuse of IPO funds ........................................45

3|P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241

 6.16 SEBI defers T+1 settlement plan after opposition from foreign investors .............................................46
6.17 SEBI tweaks eligibility norms of companies relisting after CIRP process ...............................................46
6.18 BSE, NSE, MCX gear up for India's first bullion exchange at Gift City .....................................................46
6.19 SEBI approves doing away with Minimum Promoters’ Contribution towards FPO ...............................47
6.20 SEBI eases profitability criteria for mutual fund sponsors .....................................................................47
6.21 SEBI comes out with new stress testing perimeters for commodity derivatives ...................................47
6.22 SEBI suggests relaxing of norms to boost listing of start-ups .................................................................48
6.23 Sovereign Gold Bond Scheme 2020-21 (Series IX) – Issue Price.............................................................48
6.24 Implementation of CARO order deferred by one year: MCA .................................................................48
6.25 D-Street’s worst day in 7 months as investors lost Rs 1,850 crore per minute .....................................49
6.26 PCMC & UNDP to launch India’s first social impact bond ......................................................................49
6.27 SEBI exempts fund managers from placing orders for passive trades ...................................................50
7 SEBI in News .......................................................................................................................................................50
7.1 SEBI adds new payment modes for call money for partly paid securities .............................................50
7.2 SEBI puts in place mechanism to ease e-voting process ........................................................................51
7.3 SEBI issues new framework for core settlement guarantee fund, non-defaulting members ................51
7.4 SEBI offers certain relaxations to NRIs on holding depository receipts .................................................52
7.5 SEBI permits transfer of bourses' excess contribution from core SGF ...................................................52
7.6 SEBI comes out with timeline for refunding trading members' security deposit ..................................52
7.7 SEBI issues 'procedural' guidelines for proxy advisory firms ..................................................................53
7.8 SEBI notifies Alternative Investment Funds (Amendment) Regulations, 2021 ......................................53
7.9 SEBI extends certain compliance timelines for trading, clearing members ...........................................53
7.10 SEBI Eases Software Testing Requirement .............................................................................................54

4|P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241

1 Finance News of July 2020

1.1 MoU signed between CBDT and SEBI

• Recently, a Memorandum of Understanding (MoU) has been signed between the Central
Board of Direct Taxes (CBDT) and the Securities and Exchange Board of India (SEBI).
• Objective: For data exchange between the two organizations.
• The MoU will facilitate the sharing of data and information between SEBI and CBDT on an
automatic and regular basis.

1.2 MCX gets SEBI approval to launch Gold Mini Options

• Recently, MCX has received approval of SEBI for launch of Gold Mini options with Gold Mini
(100 grams) bars as underlying.
• Gold Mini Option contracts will be available for trading with effect from July 10.
• The maximum single order size will be of 100 lots.
What is Gold option?
• A gold option is a derivative with gold as the underlying asset.

1.3 ADB raises $4 billion via bonds to help nations fight coronavirus
• Recently, the Asian Development Bank (ADB) has raised $4 billion through the sale of US
dollar bonds to increase its capital and provide more assistance to countries impacted by the
pandemic.
• ADB has tripled the size of its rescue package to $20 billion to help developing countries in
Asia counter the severe macroeconomic and health effects of the coronavirus pandemic.
• ADB plans to raise around $30 billion to $35 billion from the capital markets in 2020.
Relevance
• According to ADB data, Global economic losses caused by the coronavirus pandemic could
be between $5.8 trillion and $8.8 trillion in 2020.

1.4 NSE approves Indian Gold bars to settle futures contracts

• Recently, National Stock Exchange (NSE) has announced that it will accept gold bars
produced by the domestic refiners for settlement of the gold futures contracts traded on its
platform.
• The NSE Refiner Standards for BIS – Standard Gold would enable the acceptance of gold bars
produced by the domestic refiners in India, for settlement of the gold futures contracts traded
on the NSE platform.
• Previously, bars assayed by the London Bullion Merchants Association were approved to be
used in settling contracts on the derivative segment of NSE.
About NSE
• National Stock Exchange of India Limited is the leading stock exchange of India, located in
Mumbai, Maharashtra.
• It was established in 1992 as the first dematerialized electronic exchange in the country.

5|P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241

1.5 SEBI asks investment advisors to choose between sale or advise
• Recently, SEBI has announced that Investment advisers can either distribute financial
products or advise on them to investors, but cannot do both.
• The move will be applicable from October 1, 2020.
• The SEBI amendment also restricts the adviser's family - spouse, children and parents- from
providing distribution services to a client receiving advisory services.

1.6 NCDEX raises compensation limit to Rs 5 lakh from investor protection fund
• Recently, NCDEX has increased the maximum compensation limit from its investor
protection fund to Rs 5 lakh with effect from February this year.
• The objective of the protection fund is to compensate investors in the event of defaulter's
assets not being sufficient to meet the admitted claims of investors, promoting investor
education, awareness and research.
• In the event of funds of a defaulter's member being insufficient, the Investor Protection Fund
Trust based on the recommendations of the relevant Committee, compensates the admitted
value of claims of an investor arising out of a defaulter member subject to a compensation
limit.
About NCDEX
• National Commodity & Derivatives Exchange Limited is an online commodity exchange. It
was established in 2003.
• It provides a commodity exchange platform for market participants to trade in commodity
derivatives.

1.7 SEBI issues guidelines curbing the practice of margin trading

• Recently, Securities and Exchange Board of India (SEBI) has issued guidelines curbing the
practice of margin trading.
• This will put an end to leverage-based intra-day trading, which is rampant currently.
• SEBI has asked brokers to collect upfront value at risk (VAR) margin and extreme loss margin
(ELM) even for trading in the equity cash segment.
• This will be implemented in three phases –
o Phase 1 - December 2020, where brokers will be penalised if margin to clients is more than 25
%of the sum of VAR and ELM.
o Phase 2 - From March 2021 and June 2021 brokers will be penalised if the margin exceeds 50%
and 70% of VAR+ELM, respectively.
o Phase 3 - From August 2021 onwards, brokers will be penalised if margin exceeds VAR+ELM.

1.8 NSE-backed CAMS gets SEBI nod to float IPO

• Recently, Computer Age Management Services (CAMS) has received nod by SEBI to launch
their IPO.
• SEBI has allowed them to raise an estimated Rs. 1,500-1,600 crore through an initial share
sale.
• CAMS is backed by National Stock Exchange (NSE).

6|P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241

1.9 SEBI allows no trading window curbs on OFS
• Recently, SEBI on has allowed offer for sale (OFS) and rights entitlement transactions during
the trading window closure period.
• Under market norms, listed companies need to use a trading window to monitor transactions
by designated persons in a bid to prevent insider trading.
• The compliance officer is responsible for closing the trading window, in case the designated
persons are expected to be in possession of unpublished price sensitive information.

1.10 India announces 400 million dollar currency swap for Sri Lanka
• Recently, Reserve Bank of India has signed necessary documents for extending a 400 million
dollar currency swap facility with the Central Bank of Sri Lanka.
• The currency swap arrangement will remain available till November 2022.
• It will help Sri Lanka address the economic hardships caused by COVID-19.
About Currency Swap Agreement
• A currency swap is an agreement in which two parties exchange the principal amount of a
loan and the interest in one currency for the principal and interest in another currency.
• These are used to obtain foreign currency loans at a better interest rate that a country could
obtain by borrowing directly in a foreign market or as a method of hedging transaction risk on
foreign currency loans.

1.11 NSE starts trading of T-bills, SDLs in capital markets segment

• Recently, National Stock Exchange of India Ltd. (NSE) has started trading in T-bills (treasury
bills) and SDLs (state development loans) in its capital market segment.
About T-Bills
• Treasury bills are issued when the government needs money for a short period.
• Issued - Only by the central government
• Interest - Determined by market forces.
• Tenure of the treasury bills – 91-day, 182-day and 364-day.
About State Development Loans
• State Development Loans (SDLs) are sovereign securities issued by various State
Governments to raise funds from the market at market determined rate using auction
mechanism.
• Securities are eligible securities for Statutory Liquidity Ratio and Liquidity Adjustment Facility
of the RBI.
• SDLs do not have defined issuance calendars and their issuances are random and volatile.

1.12 Diginex launches new Singapore cryptoexchange ahead of Nasdaq

• Recently, Diginex launched a new cryptocurrency exchange focused on derivative products
in Singapore.
• It has been titled as “EQUOS”
About Cryptocurrency
• A cryptocurrency is a subset of virtual currencies, and is decentralised, and protected by
cryptography.

7|P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241

 • It makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are
decentralized networks based on blockchain technology—a distributed ledger enforced by a
disparate network of computers.
• Some Important Cryptocurrencies - Ethereum (ETH), Ripple (XRP),Litecoin (LTC), Tether
(USDT), Bitcoin Cash (BCH), Libra (LIBRA).

1.13 SEBI issues guidelines curbing the practice of margin trading

• Recently, Securities and Exchange Board of India (SEBI) has issued guidelines curbing the
practice of margin trading.
• This will put an end to leverage-based intra-day trading, which is rampant currently.
• SEBI has asked brokers to collect upfront value at risk (VAR) margin and Extreme loss margin
(ELM) even for trading in the equity cash segment.
• This will be implemented in three phases –
o Phase 1 - December 2020, where brokers will be penalised if margin to clients is more than
25 %of the sum of VAR and ELM.
o Phase 2 - From March 2021 and June 2021 brokers will be penalised if the margin exceeds
50% and 70% of VAR+ELM, respectively.
o Phase 3 - From August 2021 onwards, brokers will be penalised if margin exceeds
VAR+ELM.

2 Finance News of August 2020

2.1 RBI permits banks to invest in debt instruments through mutual funds
• It has reduced the risk capital that banks need to set aside against investment in debt mutual
funds and exchange-traded funds (ETFs).
• According to Basel III guidelines, if a bank holds a debt instrument directly, it would have to
allocate lower capital as compared to holding the same debt instrument through a mutual
fund- or exchange traded fund.
• The general market risk charge of 9 per cent will apply on both direct holdings, as well as
through mutual funds or ETFs.
Present Situation
• Banks have to set aside more capital when they invest in debt mutual funds compared to when
they buy debt instruments directly.
What are Mutual Funds?
• A mutual fund is essentially a common pool of money in which investors put in their
contribution.
• The collective amount is invested according to the investment objective of the fund.
• Some common categories of mutual funds are:
o Equity funds - funds that invest only in stocks and other equity instruments
o Debt funds - funds that invest only in fixed income instruments
o Money market funds - funds that invest in short-term money market instruments
o Hybrid funds - funds that divide investments between equity and debt to create a balance

8|P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241

 • A mutual fund is set up in the form of a trust, which has a sponsor, trustees, Asset
Management Company (AMC) and custodian.
• The Funds are managed by money managers or fund managers.
• The value of a mutual fund depends upon the performance of the Net Asset Value and can
only be determined after the market closes for the day.
What are Exchange Traded Funds (ETF)?
• Exchange traded funds pool the financial resources of several people and use it to purchase
various tradable monetary assets such as shares, debt securities such as bonds and derivatives.
• Exchange Traded Funds share characteristic features of both shares and mutual funds.
• They are generally traded in the stock market in the form of shares produced via creation
blocks.
• ETF funds are listed on all major stock exchanges and can be bought and sold as per
requirement during the equity trading time.
• Any changes in the value of an ETF can be observed instantly and can be bought and sold
throughout the business day.
• It will result in substantial capital savings for banks and is expected to give a boost to the
corporate bond market.

2.2 SEBI to set up virtual museum of securities market

• Recently, SEBI has been planning to set up a virtual museum of securities market to highlight
achievements and milestones in the Indian capital market.
• It has intended to be a visual online organised collection of history of evolution,
achievements and milestones in the Indian securities market over the decades in terms of
market infrastructure, regulation and enforcement.
• It will engage the audience with creative content through various means like video, audio, chat
bot, voice assistants, virtual reality, analytics, interactive and animated elements.
• The content would be delivered in English, Hindi and other Indian languages.
Key Information to be shared on Virtual Museum
• Information pertaining to history of securities laws as well as establishment of stock exchanges
in India.
• Commodity trading during period of various dynasties' rulers and landmark judgements for
securities market.
• Trading practices, rules, regulations prior to and after establishment of Sebi or FMC.
• History of institutions important to securities market, including UTI and Forward Market
Commission (FMC).
• Information related to developments on account of events such as world war, independence
of India and economic liberalisation would be exhibited through
audio/video/images/articles/art works
• It would provide the best in class engagement with the latest technology, dispensing the
knowledge and content of securities market in India.

9|P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] / 8146207241

2.3 RBI to set up innovation hub for financial inclusion, efficient banking
• Recently, The Reserve Bank of India (RBI) has announced that it would be setting up an
innovation hub to encourage start-ups and companies address the challenges of financial
inclusion and efficient banking transactions.
• Aim – To bring solutions to the financial sector by tapping into areas such as cybersecurity,
data analytics, delivery platforms, and payment services.
• Key Features of the Hub
• It will act as a center for ideation and incubation of new capabilities that can be leveraged to
create innovative and viable financial products or services.
• It will help achieve the wider objectives of
o Deepening financial inclusion,
o Efficient banking services,
o Ensuring business continuity in times of emergency
o Strengthening consumer protection
Relevance
• The RBI in 2019 had announced a regulatory sandbox programme for new experiments in
the field of financial technology under its supervision.
About Sandbox Framework

• RBI in 2019 had set up a regulatory sandbox framework where solutions related to digital
payments was the first cohort.
• The purpose of a regulatory sandbox stemmed from the RBI executive director Sudarshan
Sen’s committee in 2017.
• It has referred to live testing of new products or services in a controlled environment for which
regulators may permit certain regulatory relaxations for the limited purpose of testing.
• Six proposals have been received under the sandbox.
Sanbdox Framework of SEBI
• Securities and Exchange Board of India (SEBI) in June 2020 has approved the regulatory
sandbox framework for the stock market ecosystem.
• Aim - To encourage adoption and usage of financial technologies to further develop and
maintain a transparent securities market ecosystem.
• Key Guidelines
o Entities regulated by Sebi would be granted certain facilities and flexibilities to experiment
with financial technologies solutions in a live environment.
o It would be allowed on a limited set of real customers for a limited time frame.
o No exemptions would be granted from the investor protection framework, Know-Your-
Customer (KYC) and Anti-Money Laundering (AML) rules.
o Eligibility criteria for the Project
1. All entities registered with the SEBI shall be eligible for testing in the regulatory
sandbox.
2. The solution should be innovative enough to add significant value to the existing
offering in the Indian securities market.

10 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 3. It should have a genuine need for live testing the solution on real customers.
o Background
1. SEBI has constituted a committee on Financial and Regulatory Technologies under the
Chairmanship of T.V. Mohandas Pai in May 2019.
About Sudarshan Sen Committee
• The committee was set up in 2017 to study the entire gamut of regulatory issues relating to
FinTech and Digital Banking in India.

2.4 SEBI asks proxy advisors to formulate voting recommendation policies

• Recently, Securities and Exchange Board of India (SEBI) has come out with procedural
guidelines for proxy advisors.
• The new guidelines would come into force from 1st September, 2020.
Key Highlights of the guidelines
• The advisors shall formulate the voting recommendation policies and disclose the updated
voting recommendation policies to its clients.
• They shall ensure that the policies should be reviewed at least once annually.
• They will have to disclose the methodologies and the processes followed in the development
of their research and corresponding recommendations to its clients.
• They will alert clients within 24 hours of receipt of information about any factual errors or
material revisions to the report.

2.5 Paytm Money goes live with stockbroking services on its platform
• Recently, Paytm Money has started its stockbroking operations at lower brokerage charges
as part of its introductory offer.
• For availing the service, Investors will have to bear Rs 250 annual charges plus goods and
services tax (GST) annually.
• It has earlier offered investment in mutual fund products and national pension system
products.
Note - Discount broker Zerodha is the largest broking house in India in terms of active clients.

2.6 Sebi decides to decentralise portfolio managers registration work

• Recently, SEBI has decided to decentralize work related to registration of portfolio managers.
• The processing of registration applications for portfolio managers received on or after 5th
August, 2020 has been decentralized and delegated to the respective regional offices or head
office in Mumbai based on the registered address of the applicant.
Note - Sebi has four regional offices - Eastern (Kolkata), Northern (Delhi), Southern (Chennai) and
Western (Ahmedabad).

3 Finance News of September 2020

3.1 SEBI modifies mutual funds portfolio segregation norms amid Covid-19
• Recently, SEBI has modified norms pertaining to segregation of portfolio in mutual funds by
asset management companies amid the coronavirus pandemic.

11 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
Key Modifications

• It has informed that the trigger date for segregation of portfolio would be the date on which
proposal for debt restructuring has been received by the asset management company
(AMC).
• The proposal of restructuring of debt received by AMCs should be immediately reported to
o Valuation agencies
o Credit rating agencies
o Debenture trustees
o AMFI (Association of Mutual Funds in India)
About Segregated Portfolio
• Segregation is done to separate distressed assets from other more liquid assets in a
portfolio.

3.2 CCEA allows PGCIL to monetize its assets by InvIT

• Recently, The Cabinet Committee on Economic Affairs (CCEA) has allowed state-owned
power transmission company Power Grid Corporation of India (PGCIL) to monetize its assets
by floating an Infrastructure Investment Trust (InvIT).
• It has made PGCIL the first such public sector utility in India to issue InvITs.
• PGCIL would monetize five assets of gross block of Rs 7,000 crore in the first tranche.
• The amount earned through these units will not be a part of disinvestment or non-tax revenue,
and will not be used for bridging fiscal gaps.

3.3 SBI Mutual Fund unveils Magnum Children’s Benefit Fund

• Recently, SBI Mutual Fund has unveiled Magnum Children’s Benefit Fund - Investment Plan.
About SBI Magnum Children’s Benefit Fund
• It is an open-ended fund for parents to invest for their children.
• It is a predominantly debt-oriented fund that will invest in equity and equity-related
instruments.
• It includes Equity Exchange Traded Funds (ETFs) with a minimum of 65% going up to 100%,
debt including Debt ETFs and money market instruments upto a maximum of 35% in REITS and
InvITs up to 10% and up to 20 % in Gold ETFs.
• The new plan for children aged 1 year going up to when he/she is 14 years old.
• There would be a lock-in period for at least 5 years or till the child attains age of majority.
About Exchange Traded Funds (ETF)
• Exchange traded funds pool the financial resources of several people and use it to purchase
various tradable monetary assets such as shares, debt securities such as bonds and
derivatives.
• Exchange Traded Funds share characteristic features of both shares and mutual funds.
• They are generally traded in the stock market in the form of shares produced via creation
blocks.
• ETF funds are listed on all major stock exchanges and can be bought and sold as per
requirement during the equity trading time.
12 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 • Any changes in the value of an ETF can be observed instantly and can be bought and sold
throughout the business day.

3.4 Union Bank plans to raise Rs 2,000 crore by issuing Tier-II bonds
• Recently, Union Bank of India has planned to raise up to Rs 2,000 crore by issuing Tier-II
bonds.
Important Information
• The bank’s common equity Tier-1 ratio, Tier-I CAR and overall CAR stood at 8.4 per cent, 9.5
per cent and 11.6 per cent as of June 30.
• CRISIL has assigned a rating of 'AA+/Negative' to the bank’s Rs 2,000 crore of Tier-II bonds
(under Basel III).
• It has also reaffirmed its ‘CRISIL AA+/Negative’ rating on other long-term debt instruments.
About Upper Tier-II Bonds
• Upper tier-2 bonds are quasi-equity.
• It is qualified as equity because investors in these instruments get lesser priority as
compared to other bonds.
• The upper tier-2 bonds offered interest of 10.5%.
• For Basel II, upper tier-2 bond requires debt servicing to be linked to the bank meeting
regulatory norms on capital adequacy.

3.5 SEBI details operating guidelines for PMS in IFSC

• Recently, Securities and Exchange Board of India (SEBI) has provided operating guidelines for
Portfolio Management Services (PMS) at the International Financial Services Centre (IFSC).
Key Highlights of the guidelines
• The applicants need to have a minimum net worth of at least USD 7,50,000.
• Minimum amount of funds to be accepted by portfolio managers operating in IFSC should
be USD 70,000.

3.6 SEBI tightens grip on board composition at market infra institutions

• Recently, SEBI has tightened its grip on board composition at market infrastructure
institutions (MIIs).
• It has earlier opposed reappointment of certain ‘shareholder directors’ due to concerns over
their lengthy association.
About Independent Directors
• Objective – To safeguard the larger interest of the securities market.
• There are two kinds of independent directors that serve on the board of MIIs
• Public interest directors (PIDs)
o Appointed by the exchanges and SEBI.
o Appointed for a period of three years and can have a maximum of two tenures with a
single MII and one more tenure with another MII with a one-year cooling off period.
• Shareholder directors
o Nominated by dominant shareholders.

13 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 o Appointment of shareholder directors is governed by the Companies Act which allows
tenure of up to five years and reappointment by way of special resolution.

3.7 Parliamentary panel bats for abolishing LTCG on startup investments

• Recently, The Parliamentary Standing Committee on Finance has submitted its report on
"Financing the Startup Ecosystem".
• The committee has been headed by Jayant Sinha.
Key Recommendations
• It has strongly recommended abolition of long-term capital gains (LTCG) tax for investment
in start-ups.
o It should be removed for at least period of 2 years.
• Securities Transaction Tax may be applied to Collective Investment Vehicle (CIV) after 2 years.
• There should be no punishing of domestic risk capital at any level.

3.8 RBI issues draft on rupee IR derivatives

• Proposed Rupee Interest Rate Derivatives (Reserve Bank) Directions, 2020 are aimed at
encouraging higher non-resident participation, enhance the role of domestic market makers
in the offshore market, improve transparency, and achieve better regulatory oversight.
About Interest Rate Derivatives
• Interest Rate Derivatives (IRD) are contracts whose value is derived from one or more interest
rates, prices of interest-rate instruments, or interest rate indices.
Key Highlights
• It seeks to allow foreign portfolio investors (FPIs) to undertake exchange-traded rupee
interest rate derivatives transactions subject to an overall ceiling of Rs 5,000 crore.
• Net short position of an FPI on exchange-traded IRDs should not exceed its long position in
government securities and other rupee debt securities.
• The purpose of offering Rupee IRD contracts to a user, the market-maker (entities which
provide bid and offer prices to users in order to provide liquidity to the market) should classify
the user either as a retail user or as a non-retail user.
• Non-retail users, as per the draft, are entities regulated by RBI, SEBI, IRDAI or PFRDA; resident
companies with a minimum net worth of Rs 500 crore; and non-residents, other than
individuals.

4 Finance News of October 2020

4.1 RailTel files draft red herring prospectus for ₹700 crore IPO
• State-owned telecom infrastructure provider RailTel has filed Draft Red Herring Prospectus
(DRHP) with the market regulator SEBI for an initial public offer (IPO) of up to 8.66 crore
equity shares.
• The Rs 700 crore public offer will be a complete offer for sale (OFS) from the government.
• ICICI Securities, IDBI Capital, SBI Capital Markets are appointed as the book running lead
managers to the issue.
About Draft Red Herring Prospectus (DRHP)
14 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 • A draft red herring prospectus (DRHP), or offer document, is the preliminary registration
document prepared by merchant bankers for prospective IPO-making companies in case of
Book Building issues.
• The document includes information about the company’s business operations, promoters,
financials, its standing in the industry it deals in and listed or unlisted peers.
• The document clarifies the reason why the company wants to raise money from the public,
how the money will be used, and risks involved in investing in the company.
About IPO and OFS
• Initial Public offering (IPO) is the process by which a private company can go public by sale of
its stocks to general public (>50 person).
• Offer for sale (OFS) is a simpler method of share sale through the exchange platform for listed
companies.
➢ OFS mechanism is used only when existing shares are put on the block. Only promoters
or shareholders holding more than 10 per cent of the share capital in a company can
come up with such an issue.
About Book Running Lead Managers
• Performs most of the pre-issue and post-issue activities.
• Pre-issue activities - due diligence of company’s management/ business plans etc., drafting
and designing offer document, finalizing the prospectus, ensuring compliance with
requirements of the exchanges and ROC.
• Post-issue activities include management of escrow accounts, dispatching of refunds,
dematerializing of securities, listing and trading of securities.

4.2 Credit ratio of Indian companies at decadal low in April-September 2020

• According to a recent report by CRISIL, the credit ratio for the corporate segment has been at
the lowest in the last decade.
About Credit Ratio
• The credit ratio—measures the ratio of the number of companies upgraded to downgrade.
Key Highlights of Report
• Credit Ratio fell to 0.54 in the first half of the current financial year.
• The first six months of the year saw 296 downgrades and 161 upgrades.
• The moratorium on debt servicing permitted by the Reserve Bank of India (RBI), and temporary
relaxation in default recognition norms of credit rating agencies allowed by the Securities and
Exchange Board of India (SEBI) also softened the impact on ratings.
• For banks, credit growth is expected to fall to a multi-decade low this fiscal and without
restructuring, NPAs would have spiked to 11.5 percent.
• For NBFCs, credit growth is expected to de-grow by 1-3 percent this fiscal and NBFC
delinquencies could rise by 50-250 bps this fiscal.
➢ Delinquency rate refers to the percentage of loans within a financial institution's loan
portfolio whose payments are delinquent.

15 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
4.3 SEBI releases framework to monitor foreign holding in depository receipts
• Markets regulator SEBI came out with a framework to monitor foreign holding in depository
receipts (DRs).
About Depository receipts (DRs)
• A depositary receipt (DR) is a negotiable certificate representing shares in a foreign company
traded on a local stock exchange.
• Depositary receipts allow investors to hold equity shares of foreign companies without the
need to trade directly on a foreign market.
Key Highlights of Framework
• A listed company will appoint one of the Indian depositories as the designated depository for
the purpose of monitoring of limits in respect of depository receipts.
• The designated depository in co-ordination with domestic custodian, other depositories and
foreign depository (if required) will compute, monitor and disseminate the DRs' information
as prescribed in the framework.
• The investor group may appoint one such FPI to act as a nodal entity for reporting such
grouping information to its DDP in the prescribed format.
➢ Such nodal FPI would report the investment holding in the underlying Indian security
as held by ODI subscriber and / or as DR holder, including securities held in the
depository receipt account upon conversion to its domestic custodian on a monthly
basis
• In respect of FPIs which do not belong to the same investor group, responsibility of monitoring
the investment limits of FPI will be with the respective DDP or custodian.
➢ The depository which monitors the FPI group limits shall club the investment pertaining
to DR holding, ODI holding and FPI holding of same investor group and monitor the
investment limits as applicable to FPI group in a listed Indian company on a monthly
basis.

4.4 SEBI slaps Rs 6-crore penalty on NSE for investing in 'unrelated' business
• Securities and Exchange Board of India (SEBI) levied a penalty of Rs 6 crore on the National
Stock Exchange (NSE) for allegedly investing in six companies unrelated or non-incidental to
the stock exchange business.
• The exchange invested in Power Exchange India (PXIL), Computer Age Management Systems
(CAMS), NSEIT, NSDL E-Governance Infrastructure (NEIL), Market Simplified India (MSIL) and
Receivables Exchange of India (RXIL).
• The NSE held 25-100 per cent stakes in these entities through its subsidiary NSE Investments
without the SEBI approval as of September.
Why Penalty was imposed?
• NSE has violated the provisions of regulation 38(2) of SECC (Stock Exchange and Clearing
Corporation) 2018 read with regulation 41(3) of SECC 2012.
• As per Above provisions, The recognized stock exchange and recognized clearing corporation
shall not engage in activities that are unrelated or not incidental to its activity as a stock

16 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 exchange or clearing corporation, as the case may be, except through a separate legal entity
and as permitted by the Board.

4.5 Don't take Covid-related delays in payment as default: SEBI to MF valuation agencies
• SEBI asked mutual fund valuation agencies not to consider restructuring of debt and non-
receipt of dues solely due to COVID-19 related stress as a default.
About Valuation Agencies
• The valuation agencies are appointed by the Association of Mutual Funds in India (Amfi).
• They provide valuation of money market and debt securities and recognize default of
securities.
Key Direction by SEBI to Valuation Agencies
• Any proposal of restructuring received by Debenture trustees will be communicated to
investors immediately.
• If the valuation agency, based on its assessment of the proposal, is of the view that the
proposed restructuring is solely due to fallout of COVID-19 pandemic then the valuation
agency may not consider the restructuring/non receipt of dues as a default.
• In case there is any difference in the valuation of securities provided by two valuation agencies,
the conservative valuation will be accepted.

4.6 CRISIL launches Indices for Alternative Investment Funds

• CRISIL announced the launch of benchmark indices for the domestic alternative investment
fund (AIF) industry.
• The indices will cover all the three AIF categories — I, II and III — and provide investors with
a metric to compare the performance of Alternate Investment Funds.
About Alternate Investment Funds (AIF)
• AIF refers to an investment which differs from conventional investment avenues such as
stocks, debt securities, etc.
➢ Investment in venture capital, private equity, hedge funds, managed futures, etc.
Applicants can seek registration as an AIF in one of the following categories
AIF Category I
• Funds which invest in StartUps, Small and Medium Enterprises (SMEs) and new businesses
which have high growth potential and are considered socially and economically viable.
AIF Category II
• Funds investing in various equity securities and debt securities come under this category. All
those funds that are not described under category I and III by SEBI, fall under category II.
AIF Category III
• Funds which aim at short term returns fall under this category. They employ various complex
and diverse trading strategies to achieve their goal of short-term capital appreciation.
➢ Hedge Fund, Private Investment in Public Equity Fund (PIPE)

17 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
4.7 Bilateral Netting law becomes operational from October 1
• The Central Government has recently notified the Bilateral Netting of Qualified Financial
Contracts Act, 2020 (“Netting Act”), which intends to implement the process of bilateral
netting among eligible financial parties.
What is Bilateral Netting?
• Netting refers to offsetting of all claims arising from dealings between two parties, to
determine a net amount payable or receivable from one party to other.
What is Qualified Financial Contract?
• QFC means any bilateral contract notified as a QFC by the relevant authority.
• Authority could be RBI, SEBI, IRDAI, PFRDA or International Financial Services Centres
Authority.
Key Features of the Netting Act
• Applicability: The provisions of the Act will apply to QFCs between two qualified financial
market participants, where at least one party is an entity regulated by the specified authorities.
• Enforceability of netting: The Bill provides that netting of QFCs is enforceable if the contract
has a netting agreement.
➢ Netting agreement is an agreement that provides for the netting of amounts involving
two or more QFCs.
➢ Also include a collateral arrangement. Collateral arrangement is a form of security
provided for one or more QFCs in a netting agreement.
• Close-out netting arrangement: Close-out netting refers to the termination of all obligations
arising out of relevant QFCs.
➢ The process may be initiated by a party to the QFC in the case of:
i. A Default
ii. A Termination event.
• Administration practitioner is the entity that administers the affairs of the party under
Administration.
• Administration refers to imposition of moratorium, proceedings of winding up, insolvency or
bankruptcy, among others.
• The parties to a QFC must ensure that all obligations owed by one party to the other, under
the contract, are replaced by a single net amount.
• The net amount payable/receivable under the close-out netting would be determined:
18 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 (i) In accordance with the netting agreement entered into by the parties, or
(ii) Through agreement between the parties, or
(iii) Through arbitration.
Importance of Netting Act
• It is just the bilateral contracts which do not have any firm legal basis.
➢ Value of bilateral derivative contracts is estimated by the Clearing Corporation of India to
be Rs. 56,33,257 crores as of March 2018
• Bilateral contracts constitute 40 per cent of total financial contracts, while multilateral
contracts constitute 60 per cent.
• This act brings in a firm legal basis for bilateral netting between two counter parties and thus
critical for financial stability in the country.

4.8 SEBI introduces “very high-risk” category in mutual fund schemes

• SEBI changed the product labelling norms for the Rs 27-trillion mutual fund industry.
Key Highlights of Labelling Norms
• Introduced a new label called ‘very high’ risk.
➢ The existing five categories to measure risks are - low, low to moderate, moderate,
moderately high, and high.
• Any change in risk-o-meter will be communicated by way of notice-cum-addendum and by
way of an e-mail or SMS to unitholders of that scheme.
• Risk-o-meter will be evaluated on a monthly basis and mutual fund houses will have to disclose
the risk-o-meter along with portfolio disclosure for all their schemes on their respective
website and on the industry body Amfi website within 10 days from the close of each month.
• Mutual funds will have to disclose the risk level of schemes as on March 31 of every year,
along with the number of times the risk level has changed over the year, on their website and
Amfi website.
• The risk in equity funds will be judged based on three parameters –
➢ Market capitalization, Volatility, and Impact cost.
• Debt securities will be assessed based on credit risk, interest rate, liquidity, among others.
• These directives will be in force with effect from January 1, 2021, to all the existing schemes
and all plans to be launched on or thereafter.
➢ However, mutual funds may choose to adopt this directive before the specified time
period.

4.9 Private equity investments hit record high of $28.66 billion in 2020
• According to Refinitiv, a global provider of financial markets data, Private equity investments
in India hit a record high of $28.66 billion till September 2020.
• It is significantly over the $16.27 billion invested in entire 2019.
Other Highlights of the Data
• As the volume regarding PE investment has increased, the number of deals came has down to
560 so far this year as against 663 in entire 2019.
• In the last four years including 2020, the total PE investments have touched nearly $70 billion.

19 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 • There was huge bump up in PE investments in the July-September 2020 quarter at $23.47
billion compared with $ 1.49 billion in the second quarter ended June 30.
• Going by the trend so far, PE firms don’t want to miss an opportunity to put more money to
work during the Covid-19 pandemic

About PE Investment
• Private Equity refers to shares of a company that represents its ownership.
• An individual who wants to take partial ownership of a company can make a private equity
investment in that firm.
• These companies are not listed or traded on any stock exchange.

4.10 SEBI shields small investors from AT1 bonds, urges 'full discretion'
• After the YES Bank AT-1 (Additional Tier-1) bond fiasco, SEBI restricted AT-1 issuance only to
qualified institutional buyers (QIBs).
• SEBI has done small investors a good by restricting their access to AT-1 bonds.
About Additional Tier 1 (AT-1) bonds
• AT-1 bonds are a type of unsecured, perpetual bonds that banks issue to shore up their core
capital base to meet the Basel-III norms.
o Perpetual bond is a bond with no maturity date.
• The minimum trading lot size for AT1 instruments shall be Rs 1 crore
• Pay a slightly higher rate of interest compared to other bonds.
• These bonds are also listed and traded on the exchanges.
• Investors cannot return these bonds to the issuing bank and get the money. i.e there is no put
option available to its holders.
• Issuing banks have the option to recall AT-1 bonds issued by them (banks can redeem them
after 5 or 10 years)
• Banks issuing AT-1 bonds can skip interest payouts for a particular year or even reduce the
bonds’ face value.
• AT-1 bonds are regulated by RBI. If the RBI feels that a bank needs a rescue, it can simply ask
the bank to write off its outstanding AT-1 bonds without consulting its investors.
About Yes Bank AT-1 Bonds Fiasco
20 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 • Yes Bank's AT1 bonds worth Rs 8415 crore were written down to zero in March 2020 as part
of a government approved restructuring plan for the insolvent lender.
• The write down was based on Basel III norms which allowed banks to extinguish these
instruments in an emergency without consulting the investors.
Additional Information
Qualified Institutional Buyers (QIBs).
• Qualified Institutional Buyers are those institutional investors who are generally perceived to
possess expertise and the financial muscle to evaluate and invest in the capital markets.

4.11 India's first B2B crypto trading exchange 'DigitX' starts operations
About • India’s first Business-to-Business (B2B) Crypto trading exchange
• To deliver transparency and security with its Platform armed with features
Aim to bring about a much-needed trust and confidence for the investors and
traders.
• Works on the principle of super-efficiency through Blockchain & Distributed
Ledger Technology.
Key Features
• Started operations with a select set of trusted members and by the end of
2021, target of engaging around 100 members.

4.12 SEBI comes out with uniform time period for listing of securities
• Recently, Securities and Exchange Board of India (SEBI) came out with guideline for a uniform
time period for listing securities.
• The timeline will be applicable for non-convertible redeemable preference shares, debt
securities, securitized debt instruments, security receipts, and municipal bonds.
Key Highlights of Guidelines
• Allotment of securities will be completed by T+2 trading days after receiving funds.
➢ T day refers to closure of the issue.
• Issuer needs to make listing application and obtain approval from the stock exchange by T+4
trading day.
• In case of delay in listing of securities issued on private placement basis beyond the timeline,
the issuer will pay penal interest of 1 percent per annum over the coupon rate for the period
of delay to the investor.
• Issuer will be permitted to utilize the issue proceeds of its two subsequent privately placed
issuances of securities only after receiving final listing approval from stock exchanges
• Depositories will activate the ISINs (International Securities Identification Numbers) of debt
securities issued on private placement basis only after the stock exchanges have accorded
approval for listing of such securities.
• In order to facilitate re-issuances of new debt securities in an existing ISIN, depositories have
been asked to allot such new debt securities under a new temporary ISIN which will be kept
frozen.
o ISIN code, which has 12 characters, is used for uniquely identifying securities like stocks,
bonds warrants and commercial papers.

21 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 • The debt securities credited in the new temporary ISIN shall be debited and the same shall be
credited in the pre-existing ISIN of the existing debt securities, before they become available
for trading
• The direction will come into force with effect from December 1, 2020.

4.13 SEBI Circular on Mutual Fund Dividend Options

• In order to help Investors to choose the right option, SEBI came out with a Circular on Mutual
Fund Dividend Options.
Key Highlight of Circular
• All the existing and proposed mutual funds schemes shall name or rename the dividend
options in the prescribed manner.
o Dividend payout option must be renamed as "Payout of Income Distribution cum capital
withdrawal option”.
o Dividend re-investment will be renamed as "Reinvestment of Income Distribution cum
capital withdrawal option"
o Dividend transfer plan will be renamed as "Transfer of Income Distribution cum capital
withdrawal plan"
• Offer documents shall clearly disclose that the amounts can be distributed out of investors
capital (equalization reserve), which is part of sale price that represents realized gains.
Why Renaming the MF Schemes??
• In the past there have been several occasions where equity and hybrid products have been
sold on the basis of paying promise of a regular dividend.
• Many investors bought such schemes for dividends without understanding the product or the
risk associated.
• When markets fell, and fund houses skipped dividend, or investors redeemed they realised it
was paid from their capital only.
• Fund houses shall have to ensure that a clear segregation between income distribution which
is appreciation of net asset value (NAV) and capital distribution shall be disclosed in the
consolidated account statement.

4.14 Govt's social stock exchanges proposal may face disclosure roadblock
• The government’s Budget proposal to introduce the concept of social stock exchanges (SSEs)
in the country could face disclosure roadblock.
About Social Stock Exchanges
• The idea of the Social Stock Exchange (SSE) as a platform for listing social enterprise, voluntary
and welfare organizations so that they can raise capital was mooted in the Union Budget 2019-
20.
• It works under the market regulator SEBI.
• The aim of the initiative is to help social and voluntary organizations which work for social
causes to raise capital as equity or debt or a unit of mutual fund.
Recent Take Away from News

22 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 • The Working Group Report on Social Stock Exchange constituted by the Securities and
Exchange Board of India (SEBI) has evaluated the prospect of introducing a ‘Social Stock
Exchange’ (SSE).
• The Report was published on 1 June 2020.
Key Highlights of Report
• The Report has recognized a distinction between for-profit enterprises (FPEs) and non-profit
organizations (NPOs).
• The instruments listed directly on the SSE will come under the ambit of SEBI’s regulatory
jurisdiction, the NPOs will continue to operate outside SEBI’s remit.
o SEBI panel urges the government to evaluate the need for a new regulator at the end
of the immediate term of four to seven years that could monitor the entire paradigm
of social enterprises, social reporting and social auditors.
• Allowing non-profit organizations to directly list through issuance of bonds in the form of zero
coupon or zero principal bonds.
o Zero-coupon bond is a debt security that does not pay interest and are issue at a
discount to face value.
• It recommends a range of funding avenues, such as Social Venture Funds (SVFs) under
Alternative Investment Funds (AIFs).
o Social Venture Funds (SVFs) are funds investing in early-stage social enterprises to
expand opportunity for people living in poverty.
• Profit social enterprises be allowed to list on the platform with enhanced reporting
requirements.
• The social stock exchange can be housed within the existing national stock exchange market
like the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
• Investors will be allowed to avail a 100% tax exemption on their investments in the SSE mutual
fund structures subject to an overall limit of one lakh rupees.
• The Report has also advanced a proposal of a five-year tax holiday to the FPEs listed on the
SSE from the time of first listing.
Way Forward
• SEBI has formed a committee on social stock exchange.
• The committee, chaired by Harsh Kumar Bhanwala, former chairman of NABARD, would
prescribe disclosure requirements related to performance, financials and governance and
dwelling upon aspects related to social impact and social audit.

4.15 CLP Wind Farms (India) raises ₹297 crore via green bonds
• Recently, CLP Wind Farms (India) Private Ltd., a subsidiary of CLP India Private Ltd. (CLP India),
has raised ₹296.9 crore through the issuance of rated, secured, unlisted, redeemable and non-
convertible debentures.
o Rated: a grade given to a bond by a rating service.
o Secured: Backed by collateral
o Unlisted: not listed on a public market
o Redeemable: carry a specific date of redemption (Maturity)

23 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 o Non-convertible: cannot be converted to equity
About Green Bonds
• A green bond is a type of fixed-income instrument that is specifically earmarked to raise money
for climate and environmental projects.
About CLP India
• CLP India is one of the largest wind power developer in the country with committed wind
projects of close to 1,000 MW across six States.

4.16 SIP inflows drop for sixth month in September 2020

• According to data form Association of Mutual Funds in India, Investments in mutual funds via
SIPs dropped for the sixth consecutive month to ₹7,788 crore in September 2020.
About systematic investment plan (SIP)
• A systematic investment plan (SIP) is an investment vehicle offered by many mutual funds to
investors, allowing them to invest small amounts periodically instead of lump sums.
• The frequency of investment is usually weekly, monthly or quarterly

4.17 IFSCA issues regulatory framework for market access via authorised persons
• Recently, International Financial Services Centres Authority issued a regulatory framework for
market access through Authorised Person.
• It was done to widen the investor base for exchange-traded products in the IFSC and enhance
the secondary market liquidity.
About Authorised Person
• An Authorised Person is any individual, partnership firm, LLP or body corporate who provides
access to the trading platform of a stock exchange as an agent of the stockbroker.
• A stockbroker may appoint one or more Authorized Person(s) after obtaining specific prior
approval from the stock exchange concerned for each such person.
Key Highlight of Framework
• The stockbrokers/ trading members (registered with either IFSCA or SEBI or both) of the stock
exchanges shall be permitted to provide market access to investors through Authorised
Persons based in foreign jurisdictions.
• The stock exchanges and stockbrokers shall have the operational flexibility to prescribe
requirements/guidelines, in addition to those stated in the said framework

4.18 SEBI amends debenture trustee norms to protect interests of investors

• Recently, SEBI has amended debenture trustee norms.
Under the new norms:
• Debenture trustees (DT) would exercise independence to evaluate and monitor the asset
cover.
• DT would carry out monitoring of the asset cover and obtain mandatory certificate from the
statutory auditor on a half-yearly basis.
• DT will take required action by convening the meeting of debenture holders for enforcement
of security, joining the inter-creditor agreement under the framework specified by the RBI.

24 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 • The issuer company will create a recovery expense fund at the time of issuance of debt
securities that may be utilised by DT in the event of default for taking appropriate legal action
to enforce the security.
• While the debt securities are secured to the tune of 100 per cent of the principal and interest,
or as per the terms of offer document, it is the duty of the DT to monitor that the security is
maintained.
About Debenture trustees (DT)
• A Debenture Trustee is a person or entity that serves as the holder of debenture stock for the
benefit of another party.
• A debenture trustee is appointed by the issuer company.
• They are SEBI registered and regulated entities

4.19 Centre to ask at least eight PSUs to consider buy-backs

• Centre Government has asked at least eight state-run companies to consider share buybacks
in the fiscal year that runs through March 2021.
• The government had asked 23 state-run firms to either meet their targets for capital
expenditure of 1.65 trillion rupees ($22.5 billion) or reward the shareholder in the form of a
dividend.
About BuyBack
• A buyback is when a corporation purchases its own shares in the stock market.
• A repurchase reduces the number of shares outstanding, thereby inflating (positive) earnings
per share and, often, the value of the stock.
Additional Information
• In February 2020, the government had set itself a target of raising more than $27 billion from
privatisations and sale of minority stakes in state-owned companies this fiscal year.
• India is unlikely to be anywhere near its fiscal deficit target of 3.5% of GDP for 2020/21 as
coronavirus curbs hit tax collections and delayed efforts to privatise energy firm.

4.20 IFSCA prescribes regulatory framework for REITs and InvITs

• Recently, International Financial Services Centres Authority (IFSCA) has prescribed the
regulatory framework for Real Estate Investment Trusts (REITs) and Infrastructure Investment
Trusts (InvITs) in IFSC.
Key Highlights of Framework
• IFSCA has permitted global participants i.e. REITs and InvITs incorporated in FATF compliant
jurisdictions to list on the stock exchanges in GIFT IFSC.
• InvITs have been permitted to raise funds through private placements also.
• The REITs and InvITs registered in IFSC have been permitted to invest in real estate assets and
infrastructure projects respectively in IFSC, India and other foreign jurisdictions.
• REITs and InvITs that are already listed in any of the permissible jurisdictions other than IFSC
have been permitted to list and trade on the recognised stock exchanges in IFSC
About Financial Action Task Force (FATF)
• FATF is an intergovernmental organisation founded in 1989 to combat money laundering and
terrorism financing.
25 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 • Headquarters: Paris, France
• The FATF currently has 39 member comprising 37-member (Including India) and 2 regional
organisations (European Union and Gulf Cooperation Council).
About REITs
REITs are similar to mutual funds. While mutual funds provide for an opportunity to invest in equity
stocks, REITs allow one to invest in income-generating real estate assets.

About InvITs
• An Infrastructure Investment Trust (InvITs) is a collective Investment Scheme like a mutual
fund, which enables direct investment of money from individual and institutional investors in
infrastructure projects to earn a small portion of the income as return.
• An InvIT consists of four elements:
o Trustee – The person who inspects the performance of an InvIT is certified by Sebi and
he cannot be an associate of the sponsor or manager.
o Sponsor(s)- He must hold a minimum of 25 per cent for three years (at least) in the
InvIT
o Investment Manager – It is an entity or limited liability partnership (LLP) or organisation
that supervises assets and investments of the InvIT and guarantees activities of the
InvIT.
o Project Manager – It refers to the person who acts as the project manager and whose
duty is to attain the execution of the project and in case of PPP projects.

4.21 MCX launches futures trading in base metals index

• Recently, MCX launched futures trading in real-time Base Metals Index 'METLDEX'.
• METLDEX is based on the five base metals – zinc, copper, nickel, lead and aluminium.

26 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 • It carries around 33.06% weight for zinc, 29.81% for copper, 14.77% for nickel, 12.88% for
lead and 9.48% for aluminium.
• The contract has a lot size equal to 50 times of the underlying MCX iCOMDEX base metals
index. The tick size for the contract is Re 1 and the contracts will be settled in cash.
• METLDEX futures offers retail investors an opportunity of investing in the industrial sector
without the need to analyse each and every commodity separately.
Additional Information
• MCX had previously launched the country’s first bullion index, MCX iCOMDEX Bullion or
BULLDEX.
• The Index track the real-time performance of the gold and silver futures contracts.

4.22 BSE joins hands with Telangana govt to help MSMEs raise equity funds
• Bombay Stock Exchange has joined hands with the Telangana government, along with
GlobalLinker, to help micro, small and medium enterprises (MSMEs) raise equity funds.
About Bombay Stock Exchange
• Asia's oldest stock exchange.
• Head office: Mumbai

4.23 SEBI releases guidelines for utilization of fund created for farmers, FPOs
• Recently, SEBI allowed exchanges dealing with Agri-commodity derivatives to utilize the fund
created for Farmers, FPOs.
Background
• In 2019, SEBI asked the exchanges to create a fund for Farmers and Farmer Producer
Organizations (FPOs) in which the regulatory fee forgone by the regulator would be deposited.
o SEBI has reduced the regulatory fee on Stock Exchanges with respect to turnover in
agricultural commodity derivatives.
Key Highlight of guidelines
• Fund will be used for reimbursement of mandi tax and charges incurred by them on storage
and transportation of goods.
• Farmers / FPOs will be reimbursed certain percentage or fixed amount of the premium paid
by them, for purchasing ‘options in goods’ on the exchange platform.
• Fees levied by Clearing Corporation, if any, on farmers/FPOs in the process of their
participation in commodity derivatives trading will be reimbursed.
• Exchanges must include the details of the corpus of the fund and its utilization in the Monthly
Development Report (MDR).

4.24 SEBI constitutes panels to suggest policy for securities market data
• The Securities and Exchange Board of India (SEBI) has constituted a Standing Committee --
Market Data Advisory Committee (MDAC) – to recommend appropriate policy for access to
securities market data.
• The panel chaired by Madhabi Puri Buch.
• Additionally, SEBI has set up a web page to provide curated links of publicly available data on
various segments of the Indian securities market.
27 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
4.25 SEBI bans Birla Pacific Medspa, Yashovardhan Birla, 8 others for 2 years
• SEBI has barred Birla Pacific Medspa Ltd, Yashovardhan Birla and eight others from the
securities market for two years for mis-utilization of the IPO proceeds.
• The regulator found that the companies made misstatements in the prospectus in respect of
the objects of the IPO.

4.26 SEBI fines ₹ 65 lakh on 13 entities for manipulative trades

• Recently, Markets regulator SEBI has imposed a total penalty of ₹ 65 lakh on 13 entities for
manipulating the share price of Jaisukh Dealers Ltd.
• Entities have manipulated the price of JDL in violation of Prohibition of Fraudulent and Unfair
Trade Practices norms.

4.27 LIC IPO may spill over to next fiscal

• According to Department of Investment and Public Asset Management, initial public offering
of Life Insurance Corp (LIC) may spill over to the next fiscal as the government will first look at
the independent actuarial valuation of the country''s largest insurer.
The pre-IPO work of LIC is going on at four stages –
• Appointment of advisors for ensuring compliance- Deloitte and SBI Caps
• Legislative amendment in the LIC act -the Department of Financial Services (DFS) is working
along with DIPAM
• LIC''s internal software changes to come out with its ''embedded value''
• Appointing an actuary for vetting LIC's actuarial valuation.
Additional Information
• A stake sale in LIC is crucial for meeting a record Rs 2.1 lakh crore disinvestment target set for
the current fiscal ending March 31, 2021.
• The Embedded Value (EV) of a life insurance company is the present value of future profits
plus adjusted net asset value.

4.28 SEBI's role in Franklin Templeton crisis draws anger of Karnataka HC

• Recently, Securities and Exchange Board of India (Sebi) has drawn anger from the Karnataka
High Court (HC) for its handling of the Franklin Templeton (FT) crisis that led the asset manager
to shut six of its debt schemes.
About Franklin Templeton (FT) crisis
• Franklin Templeton has recently wound up six of its debt schemes. The combined size of these
funds are Rs 25,856 crore as on April 2020.
Key highlights of Karnataka HC's order
• FT Trustees’ decision to wind up schemes cannot be implemented without unitholders’ nod
• Regulations 39-41 of Sebi’s mutual fund regulations are legal and valid
o Trustee company is bound by its statutory obligation to obtain the consent of
unitholders.
o Regulation 39 (2)(a)- 75% of unitholders may require a scheme to be wound up.
• Trustees to provide true copies of board resolutions to unitholders of six schemes
• Sebi directed to act within six weeks from receipt of final forensic audit report
28 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 • Unitholders not entitled to receive copy of forensic audit report

5 Finance News of November 2020

5.1 Abu Dhabi's SWF becomes first notified Fund to get 100% IT exemption
• Recently, India has granted tax free status to Abu Dhabi's Sovereign Wealth Fund (SWF) - MIC
Redwood 1 RSC Ltd - to expedite foreign investment in the country's priority areas during the
Covid pandemic.
• MIC Redwood has been provided 100 per cent income tax exemption to income from interest,
dividend and long-term capital gains for its investment in India's priority sector.
• MIC Redwood becomes first notified Fund to get 100% IT exemption.

5.2 SEBI issues guidelines for rights issue by unlisted InvITs to raise funds
• Recently, Markets regulator SEBI allowed unlisted Infrastructure Investment Trusts (InvITs) to
raise funds through rights issue of their units.
SEBI Guideline Regarding Rights Issue
• Minimum allotment to any investor will be Rs 1 crore.
• The issuance will be subject to several conditions, including obtaining in-principle approval of
the stock exchanges for listing of units proposed to be issued.
• None of the respective promoters or partners or directors of the sponsor or manager or
trustee of the InvIT is a fugitive economic offender.
• Investment manager on behalf of the InvIT will decide the issue price and disclose it in letter
of offer.
• The rights issue will be open within three months from the record date and will remain open
for minimum 3 and maximum 15 working days.
• Units need to be allotted in the dematerialized form only.
• An InvIT will have to file an allotment report with Sebi providing details of the allottees and
allotment made within 15 days of the issue closing date.

5.3 Swiggy announces ESOP liquidity programme

• Recently, Food ordering platform Swiggy announced a secondary liquidity programme for its
employees who were part of the employee stock ownership plan (ESOP) of the company.
• The total quantum of the secondary liquidity programme is between $7-9 million and it will
be completed by April 2021.
About employee stock ownership plan (ESOP)
• An ESOP (Employee stock ownership plan) refers to an employee benefit plan which offers
employees an ownership interest in the organization.
• Employee stock ownership plans are issued as direct stock, profit-sharing plans or bonuses,
and the employer has the sole discretion in deciding who could avail of these options.

5.4 NSE to launch first agricultural commodity futures contract

• Recently, National Stock Exchange announced that it will launch its first agricultural
commodity futures contract for crude degummed soybean oil on December 1.
29 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 • The contract will facilitate the soybean oils processing and allied industries in India and
overseas.
• The contract is a monthly expiry cash settled futures contract with a trading lot size of 10
metric ton (MT) and price basis as Kandla.

5.5 SEBI introduced new flexi cap category in mutual funds

• Recently, SEBI has introduced a ‘flexi-cap category’ for mutual funds (MFs), which will be
required to invest at least 65% of the corpus in equity but will have no restrictions on investing
in large-, mid- or small-cap company stocks.
• SEBI has also given liberty to AMCs to convert their existing funds into this category.
• Since this will be a fundamental change in the schemes, existing investors of these schemes
will be given a mandatory 30-day window where they can redeem without paying any exit
load.
Background
• In September 2020, SEBI stipulated that the MFs should allocate 75% of the assets in equity of
25% each in large, mid and small-cap stocks as investments.
About Multi Cap Fund
• These are diversified mutual funds which can invest in stocks across market capitalization. Its
portfolio comprises of large cap, midcap and small cap stocks and is relatively less risky
compared to a pure mid cap or a small cap fund

5.6 CCI approves transfer of 100% shareholding of Sinochem Group Company Limited
• Recently, Competition Commission of India (CCI) approved transfer of 100% shareholding of
Sinochem Group Company Limited (Sinochem) and China National Chemical Corporation
Limited (ChemChina) to a new company wholly owned by China State-owned Assets
Supervision and Administration (Central SASAC), under Section 31(1) of the Competition Act,
2002.

5.7 Sensex, Nifty soar to lifetime highs as Samvat 2077 gets off to bright start
• Recently, Domestic equity benchmarks surged to lifetime highs as investors built up fresh
positions in the special Muhurat trading session to mark the beginning of Hindu Samvat year
2077.
About Sensex and Nifty
Sensex- Benchmark index of BSE Limited.
• The index captures the performance of the top 30 largest, most liquid and financially stable
companies from across major sectors of the Indian economy that are listed on the exchange.
Nifty- benchmark of the National Stock Exchange (NSE).
• The Index tracks the behavior of a portfolio of 50 blue chip companies, the largest and most
liquid Indian securities.

5.8 SEBI’s dual settlement cycle faces opposition

• The markets regulator’s plan to shorten the transaction period of trade and give traders an
option of two periods is facing resistance from foreign investors and large brokers.
• Giving traders an option will make trading complex
30 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
Background
• The Securities and Exchange Board of India (SEBI) plans to shorten the settlement cycle to T+1
(trade plus one day) and give traders the option of either T+1 or T+2.

5.9 RailTel gets SEBI's go-ahead to float IPO

• Recently, State-owned RailTel Corporation of India Ltd has received SEBI’s go-ahead to raise
Rs 700 crore through an initial Public offer.
• The initial public offer (IPO) is entirely an offer-for-sale through which the government will
offload 8.66 crore equity shares.
• ICICI Securities, IDBI Capital, SBI Capital Markets Ltd are merchant bankers to the issue.
Additional Information
• Offer For sale- promoters in public companies can sell their shares and reduce their holdings
in a transparent manner through the bidding platform.

5.10 SEBI set up an expert group to review the framework of share-based employee benefit and
issue of sweat equity
• Recently, SEBI has set up seven-member expert group to review the framework of share-
based employee benefit and issue of sweat equity.
• Chairman: Sandip Bhagat
About Sweat Equity
• Sweat equity is a party's contribution to a project in the form of labor, as opposed to financial
equity such as paying others to perform the task.
• It refers to the allotment of equity shares to employees as compensation for the efforts and
hard work in providing intangibles, like growth or success, for the company.

5.11 12 Indian stocks to get included into MSCI index and two will be removed
• Recently, Global index services provider MSCI has included 12 Indian stocks to its standard
index as part of its semi-annual review and are expected to see an inflow of about Rs 17,300
crore by end of Nov 2020.
• Kotak Mahindra Bank is expected to see an inflow of Rs 5,900 crore on account inclusion.
• Kotak Mahindra Bank, IPCA Laboratories, Muthoot Finance, ACC, Adani Green, Balkrishna
Industries, Larsen & Toubro Infotech, MRF, PI Industries, Trent NSE, Apollo hospital and Yes
Bank are the new entrants in the MSCI Standard Index while Bosch and LIC Housing will be
excluded.
About MSCI Global Index
• It is a market cap weighted stock market index of various stocks from companies across the
world.
• Headquarter: New York

5.12 BSE signs MoU with premier bullion trade associations across India
• Recently, BSE has signed a Memorandum of Understanding (MoU) with Sangli Sarafa
Association, Yavatmal Sarafa Association, Amritsar Sarafa Association, Shree Choksi Mahajan
Association and Gems and Jewellery Trade Council of India (GJTCI).

31 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 • These 5 associations collectively represent close to 2,200 members, engaged in retail sale and
trade of bullion.
Relevance
• This will facilitate knowledge sharing or exchange of ideas, education and training.
About BSE Limited
• Bombay Stock Exchange Ltd is Asia’s oldest stock Exchange and is Headquartered at Mumbai.

5.13 SEBI directs open-ended debt MFs to maintain 10% liquidity buffer
• Recently, SEBI directed all open-ended debt mutual fund schemes to maintain liquidity buffer.
• All open-ended debt schemes (except overnight fund, liquid fund, gilt fund and gilt fund with
10-year constant duration) shall hold at least 10% of their net assets in liquid assets
Relevance
• Move is akin to banks having an SLR (statutory liquidity ratio) and CRR (cash reserve ratio) and
will help improve liquidity management.
About Debt Mutual Funds
• A debt fund is a Mutual Fund scheme that invests in fixed income instruments, such as
Corporate and Government Bonds, corporate debt securities, and money market instruments
etc. that offer capital appreciation.
• Debt funds are also referred to as Fixed Income Funds or Bond Funds.

5.14 SEBI releases framework for limited purpose clearing corporation

• Recently, SEBI released framework governing the outsourcing activities of the limited purpose
clearing corporation, its arrangements regarding business continuity plan, disaster recovery
and cyber security mechanism.
About Limited Purpose Clearing Corporation (LPCC)
• LPCC is an entity established to undertake the activity of clearing and settlement of repo
transactions.
Key Highlights of Framework
• The LPCC needs to enter into outsourcing agreements with at least two existing Clearing
Corporations (CCs) so that there is complete redundancy and business continuity in place.
• It laid out various conditions determining liability of LPCC and stock exchanges in case of
various failures and disputes.
• The transactions would be executed on the platform of exchanges.
• For margin blocking, collateral management, pay-in and pay-out of funds and securities,
separate bank and demat account would be opened by the LPCC.
• As part of the risk management process, the LPCC would define the risk management
parameters.
Additional Information
• Business continuity planning is the process of creating systems of prevention and recovery to
deal with potential threats to a company.
• Disaster recovery Mechanism consists of the precautions taken by your company to ensure
the effects of a disaster will be minimized and that you will be able to either maintain or quickly
resume all critical functions
32 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 5.15 NCDEX rolls out initiative to encourage FPOs to trade in options in goods
• Recently, NCDEX announced that it will bear premium for trading up to 5,000 tonnes of chana
and mustard seeds to encourage farmer producer organizations (FPOs) and farmers to take
benefit of trading in 'options in goods' on its platform.
About NCDEX
• National Commodity & Derivatives Exchange Limited (NCDEX) is an online commodity
exchange based in Mumbai.

5.16 BSE StAR MF launches direct investment portal for corporates

• Recently, BSE’s StAR Mutual Fund launched a direct investment portal for corporates, which
will simplify the investment process.
• The portal -- StAR MF Corp Direct -- will simplify and provide end-to-end value-based services
to the asset management companies (AMCs), distributors, investors, and mutual fund industry
participants.
• The portal is currently live for corporates and soon will be available for other non-individuals
like HUF, partnership firms, societies among others.
Additional Information
• BSE StAR MF’s net equity inflow contribution to mutual funds industry in Oct 2020 remained
positive with value of ₹1,033 crore as compared to ₹-2,725 crore of industry.
• Overall net inflows contribution was 7% with a value of ₹6,451 crore as compared to industry
total of ₹98,576 crore
About BSE StAR MF
• BSE Ltd offers its platform (BSE StAR MF) to Mutual Fund Distributors (MFDs) to purchase and
redeem mutual fund units on behalf of their clients.

5.17 India's G-secs one of most developed among emerging markets: RBI study
• According to a recent RBI study, India’s government securities markets is one of the most
sophisticated in Asia and is the largest after China and Malaysia.
Key Highlights of Study
• Maturity profile of outstanding Indian government debt is more uniformly distributed across
short (less than 5 years), medium (5 to 10 years) and long (above 10 years) tenors, allowing
investors the flexibility to invest as per their time horizons.
• The average maturity of outstanding government debt is relatively high, indicating a lower
rollover risk.
o Rollover risk is a risk associated with the refinancing of debt.
• The Indian yield curve is also among the flattest, reflecting the lower term premium across
the term structure with a yield curve stretches up to 40 years.
o Certain bonds demand liquidity premium, resulting in short curls in the yield curve.
• India’s bid-ask spread is among the lowest amongst Asia peers, reflecting a liquid market
which do not materially increase for large transactions.
o The bid–ask spread, is the difference between the prices quoted for an immediate sale
and an immediate purchase of security.

33 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 • The turnover ratio – which is the ratio of turnover to outstanding stock of bonds, is lower in
the Indian case, “indicating relatively lower volume in the secondary market.”
• Yield volatility for Indian government securities has generally remained higher than for bonds
in China and Malaysia due to supply concerns and volatility in crude oil prices.
o Higher the yield volatility, lesser the predictability of the daily movements in bond
yields. Near zero indicates that daily bond yields is clustered around average yield.
• India’s bond market is also not much open for non-resident investors as the government
prefers to open the market gradually, which has insulated the Indian markets from
vulnerabilities of external shocks.

5.18 RBI panel proposes to raise promoters cap to 26% in private banks
• Recently, an internal working group set up by the RBI has proposed to raise the cap on
promoters’ stake in private banks from the current 15 % to 26 % in 15 years.
Key Highlights of Recommendation
• Large non-banking finance companies (NBFCs) with an asset size of ₹50,000 crore and above,
including those owned by a corporate house, may be considered for conversion into banks -
subject to completion of 10 years of operations.

34 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 • The minimum initial capital requirement for licensing new banks should be enhanced from
₹500 crore to ₹1,000 crore for universal banks and from ₹200 crore to ₹300 crore for small
finance banks.
• Large corporate/industrial houses may be allowed as promoters of banks only after
necessary amendments to the Banking Regulations Act, 1949 to deal with connected lending
and exposures between the banks and other financial and non-financial group entities.
• Strengthening of the supervisory mechanism for large conglomerates, including consolidated
supervision.

5.19 SEBI proposed to reduce the minimum offer size in an IPO

• Recently, SEBI proposed to reduce the minimum offer size in an initial share sale, whereby
companies with a post-issue capital of above ₹10,000 crore would be required to offer at
least 5% stake in IPO.
o At present, all companies with a post-issue capital above ₹4,000 crore are compulsorily
required to dilute at least 10% shareholding in an initial public offering (IPO).
• The regulator recommended that minimum public shareholding (MPS) of 10% should be
achieved in 18 months by such issuers and 25% within 3 years from the date of listing.
• For large issuers with post issue market capitalization (MCap) of ₹1 lakh crore and above
o Minimum of 10% should be achieved in two years and 25% within five years (Currently
3 years) from the date of listing
Relevance
• The proposed change will help the large issuers from cumbersome process of issuing minimum
10% and also prevent them from unnecessary dilution of holding of the promoter or existing
shareholder.

5.20 NSE Academy acquiring TalentSprint

• Recently, NSE Academy, the education arm of the National Stock Exchange (NSE), has acquired
majority stake in TalentSprint, a tech-enabled education platform for working professionals
backed by Nexus Venture Partners.
• NSE Academy will acquire 100% stake in TalentSprint over the next 3 years.
• TalentSprint offers advanced certification programmes in emerging and deep technologies
to aspiring and experienced professionals using a hybrid online/onsite model, in partnership
with academic institutions and global corporations.
• Emerging technologies includes: Artificial Intelligence, fintech and Blockchain in the capital
market and Banking, financial services and insurance (BFSI) domain through online and offline
modes.

5.21 Mutual funds add 4 lakh folios in Oct; total tally at 9.37 crore
• According to data from the Association of Mutual Funds in India (Amfi), the number of folios
with 45 fund houses rose by 4.11 lakh to 9,37,18,991 at the end of Oct 2020 from 9,33,07,480
at September-end, primarily on account of contribution from debt schemes.
Key Highlights of Data
• Of the total new folios in Oct 2020, more than 2 lakhs were added in debt funds.

35 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 • The number of folios under equity and equity-linked saving schemes rose by 30,000 in October
to 6.39 crore.
• Short duration funds added Rs 41,690 folios in October, followed by corporate bond funds (Rs
33,935), liquid funds (Rs 28,839) and banking and PSU (public sector undertaking) funds (Rs
17,075).
• Overall, investors infused Rs 98,576 crore in various mutual fund schemes in Oct 2020.
• Debt-oriented schemes witnessed a net inflow of Rs 1.1 lakh crore in October, after recording
net outflows for two months in a row.
Additional Information
• In mutual funds, a folio number is a unique number identifying your account with the fund.
An investor can have multiple folios.
• A folio number is a useful digital tracking tool that can be used to keep track of investments.

5.22 India INX inks pact with Luxembourg Stock Exchange to develop green finance
• Recently, India International Exchange (India INX) partnered with Luxembourg Stock
Exchange to promote green finance in the local market.
• The pact with Luxembourg Stock Exchange will provide opportunities for dual listing,
enhancing visibility and also increase secondary market trading in green.
Background
• In 2019, India INX had launched its green listing and trading platform Global Securities Market
(GSM) Green, which serves as a plank for fundraising and trading in green, social and
sustainable bonds exclusively.
• India INX, a subsidiary of BSE Ltd, commenced its trading activities in January 2017 and is
India's first International Exchange set up at GIFT City.

5.23 SEBI targets analyst meets, proposes steps to curb information asymmetry
• Recently, SEBI proposed slew of measures to curb information asymmetry arising from analyst
meets and conference calls conducted by listed companies.
Key Highlights of Measures Proposed
• Companies need to make audio/video recordings of all such meetings, which should be made
available on their website and on stock exchanges within 24 hours of the event taking place.
• Any unpublished price-sensitive information (UPSI) needs to be disclosed immediately to the
public at large.
• Entities will have to prepare written transcripts which should be made available within 5
working days after the earnings call and should be archived on the company’s website for at
least eight years.
• No sharing of UPSI in one-to-one meets
• Companies allowed to decide if conference calls open to everyone or existing shareholders

5.24 SEBI proposes rationalizing existing timelines for delisting process

• Recently, SEBI proposed enhancing disclosure requirement by promoters and specified the
timeline for obtaining the company's board approval for voluntary delisting.

36 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 • The move is aimed at making the delisting process robust, efficient, transparent and investor
friendly.
Key Highlights
• Promoter or acquirer should make the public announcement of their intention to voluntarily
delist the company to all the stock exchanges on which the company is listed, on the same day
their said intention is intimated to the company.
o Currently it is disclosed by the company’s Board
• The company should convene the board meeting within 21 working days from the date of
receipt of delisting proposal to consider and approve the delisting proposal.
o Currently no timeline for approval
• The committee of independent directors may be required to provide their reasoned
recommendations on the proposal for delisting.
• Voting pattern of the committee of the independent directors shall also be disclosed
• Promoters shall open an escrow account within seven working days of the shareholders'
approval and deposit therein an amount equivalent to 25% of the total consideration,
calculated based on the floor price or indicative price.
• The promoter shall enter into tripartite agreement between the manager to the offer and the
bank for the purpose of opening and managing the escrow account
• In case of failure of the delisting offer, 99% of the amount lying in escrow account shall be
released within one working day of public announcement of the failure of the voluntary
delisting
• Remaining 1% shall be released post returning the shares or revoking the lien as per the
timelines and ensuring the compliance thereof by the merchant banker.

5.25 NSE, BSE declares Karvy Stock Broking as defaulter, expels from membership
• Recently, National Stock Exchange and Bombay Stock Exchange have declared Karvy Stock
Broking as a defaulter for non-compliance with the regulatory provisions of the bourse
effective from 23rd and 24th November 2020 respectively.
• In addition, Karvy Stock Broking has been expelled from the membership of the exchanges.
Background
• Karvy had unauthorisedly transferred securities of clients into its Demat accounts by misusing
the Power of Attorney given by its clients.
• In November 2019, Securities and Exchange Board of India had barred Karvy from taking new
brokerage clients after it had allegedly misused clients’ securities to the tune of more than Rs
2,000 crore.
Additional Information
• Investors having any outstanding claims against the brokerage can file their claims with the
exchange within 90 days from the date of issue of the notice and till February 22, 2021.

5.26 SEBI launches SMARTs program to strengthen investor education framework

• Recently, SEBI launched the Securities Market Trainers (SMARTs) programme to strengthen
investor education and awareness framework.

37 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 • The first batch of SMARTs empanelled by Sebi includes 40 individuals across 16 states and
union territories, covering 31 districts on a pan-India basis.
• SMARTs will conduct investor education programs in their respective geographical areas.
• The education programs to be conducted by SMARTs will be free of cost to investors.
• The cost for conducting the programs would be met from Sebi's Investor Protection and
Education Fund.

5.27 SEBI amends guidelines on preferential allotment by listed InvITs

• Recently, SEBI amended the guideline on preferential allotment by listed InvITs.
• Accordingly, any person belonging to sponsor (s) has sold/ transferred their units of the issuer
during the six months preceding the relevant date, the sponsor(s) shall be ineligible for
allotment of units on preferential basis.

5.28 SEBI eases restrictions placed to curb Covid-induced volatility

• Recently, The Securities and Exchange Board of India has decided to ease certain regulatory
restrictions introduced in March 2020 to contain the spike market volatility following the sell-
off triggered by the spread of Covid.
• Measures taken regarding stock futures and options and the increase in margin for non-F&O
(Futures & Options) stocks in cash market will be withdrawn from November 26.
o These restrcitions aimed at ensuring orderly trading and settlement, effective risk
management, price discovery and maintenance of market integrity.
Restrictions placed from March 2020
• The watchdog had increased the margin requirement for non-F&O stocks in cash market to
40%
• It also revised Market Wide Position Limit (MWPL) from 95 per cent to 50 per cent of existing
levels in a phased manner.
About Market Wide Position Limit
• A market-wide position limit is the maximum number of open positions allowed across all F&O
contracts of the underlying stock.
• An open position means that the trader holds a certain quantity of a given financial
instrument.

5.29 Mid, small cap mutual funds top equity categories with upto 59% returns in 1 year
• According to a recent data, mid cap mutual funds and small cap funds have become the top
performing categories across the equity mutual funds, excluding sectoral funds.
• The best performing scheme in the last one year is Quant Small Cap Fund with a return of 59%,
followed by BOI AXA Small Cap Fund which gave 44% returns in the same time period.
• The largest fund among the mid cap funds, HDFC Mid-Cap Opportunities, has generated 15%
returns in the one- year period.
What is Large, Mid and Small Cap Funds???
Based on the market cap, companies are classified as large-cap companies, mid-cap companies, and
small-cap companies. In order to ensure that equity schemes follow uniform norms for defining large,
mid, and small caps, the Securities and Exchanges Board of India (SEBI) has defined them as follows:
38 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 o Large-cap companies – 1st to 100th company in terms of market capitalization
o Mid-cap companies – 101st to 250th company in terms of market capitalization
o Small-cap companies – 251st company onwards in terms of market capitalization
• Large Cap funds are open-ended, equity funds which invest at least 80% of their total assets
in large-cap stocks.
• Mid-cap funds are open-ended, equity funds which invest around 65% of their total assets in
equity and equity-related instruments of mid-cap companies.
• Small-cap funds are open-ended equity funds which invest a minimum of 65% of their total
assets in small-cap stocks.
Type of Fund Risk profile Return
Large Cap Fund Least Risky Least return
Mid Cap Fund Riskier than Large Cap but less riskier than Small Cap Fund Average Return
Small Cap Fund Most Risky Highest Return

5.30 SEBI asks NSE to increase IPF corpus, implement SOP to process investors
• Recently, SEBI has asked National Stock Exchange to operationalize a detailed standard
operating procedure to enhance the effectiveness of the Investor Protection Fund (IPF) and
to improve the investor experience while making claims against defaulting trading members.
• SEBI has also asked NSE to increase the size of its IPF corpus to Rs 1,500 crore in order to
protect the interests of investors in the light of broker defaults.
• The adequacy of the IPF corpus will be reviewed on a half yearly basis and incremental
contributions will be made to it, if required.
• The standard operating procedure (SOP) covers procedures and timelines for obtaining
information from investors, processing investor claims, review of claims and timeline for
declaration of a trading member as a defaulter.
• All eligible investor claims of a defaulting trading member will be paid as per the policy without
any aggregate limit per trading member subject to a maximum of Rs. 25 lakhs per client.
About Investor Protection Fund
• NSE has established an Investor Protection Fund with the objective of compensating investors
in the event of defaulters' assets not being sufficient to meet the admitted claims of investors,
promoting investor education, awareness and research.
• The Investor Protection Fund is administered by way of registered Trust created for the
purpose.
• The Investor Protection Fund Trust is managed by Trustees comprising of Public
representative, investor association representative, Board Members and senior officials of the
Exchange.

5.31 NSE declares Anugrah Stock and Broking as defaulter

• Recently, the National Stock Exchange has declared Anugrah Stock and Broking a defaulter
and expelled the brokerage house’s membership.
• The matter pertains to involvement of ASBPL in activities other than securities, collecting funds
from clients under assured return schemes, misappropriation of clients' funds and securities,
among others.
39 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 • The regulator also passed directions against the directors of ASBPL, Teji Mandi Analytics, its
directors and Om Sri Sai Investments.
• Teji Mandi Analytics was registered with NSE as an authorised person of ASBPL while Om Sri
Sai Investments was a sister concern of ASBPL.
Additional Information
• "Authorised Person" (AP) means any person – Individual, partnership firm, LLP or body
corporate – who is appointed as such by a stock broker (including trading member) and who
provides access to trading platform of a stock exchange as an agent of the stock broker.

5.32 RBI issues another marquee 10-year bond, making it third this calendar
• Recently, The Reserve Bank of India (RBI) and the government have once again introduced a
new 10-year benchmark bond as the old one crossed Rs 1 trillion in outstanding.
• The government raised Rs 8,000 crore through the new 10-year bonds at a coupon of 5.85 per
cent.
• This is the third benchmark 10-year bond in this calendar, indicating the sheer volume of bonds
getting issued by the government.

Relevance
• New bonds are issued after a particular volume is reached as it helps avoid bunched up
redemption payment at the time of maturity.
o The RBI usually stops issuing a bond once the total outstanding amount reaches
approximately Rs 1.2 trillion.
• When the outstanding comes close to Rs 1.2 trillion, people may not take positions on existing
bonds fearing issues will stop and this will push up yields of the Bond.

6 Finance News of December 2020

6.1 NTPC offers to buy back Masala bonds worth ₹4,000 cr

• Recently, NTPC Limited has offered to buy back its masala bonds due in August 2021 and May
2022.
• NTPC proposed a cash tender offer for rupee bonds worth ₹4,000 crores that have been issued
by the company in two tranches of ₹ 2,000 crore each during August 2016 and May 2017.

40 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 • Both the bonds are payable in US dollars.
About Masala Bonds
• Masala bonds are Indian Rupees (INR) denominated debt instruments that are issued outside
of India.
• They are typically issued by Indian entities that are looking to raise debt in the overseas
market.
• The unique feature of masala bonds is that Rupee currency risk is borne by bond investors
instead of bond issuers.

6.2 NSE launches its first agricultural commodity futures contract CDSO
• Recently, National Stock Exchange launched its first agricultural commodity futures contract
on crude degummed soybean oil.
• The contract will facilitate the soybean oils processing and allied industries in India and
overseas, a perfect hedging tool for managing their price.
• The futures contract is a monthly expiry futures contract with a trading lot size of 10 metric
ton (MT) and price basis as Kandla.
• The first trade was executed by East India Securities Ltd and Budge Budge Refineries Ltd, one
of the premier edible oil refiners.
• According to the exchange, day one recorded trading of more than 4,200 tonne with turnover
exceeding Rs 44.67 crore indicating positive interest of market

6.3 SEBI eases compliance norms for brokers and Depository Participants
• Recently, SEBI has relaxed compliance requirements for brokers and depository participants
with regards to submission of reports pertaining to internal as well as system audit in the wake
of the coronavirus pandemic.
• SEBI has given time till December 31, 2020 to brokers to submit half-yearly networth
certificate, reports on internal audit as well a system audit for half year ended on September
30, 2020.
• Also, brokers have been given time till January 31, 2021 to submit report on cybersecurity and
cyber resilience audit for half year ended on September 30.
• Depository participants can submit an internal audit report for the half year ended on
September 30 and systems audit for the financial year ended March 31 till December 31, 2020.
• Sebi has also eased rules with regard to submission of KYC (Know Your Client) application.
o Under the norms, KYC application form and supporting documents of the client need
to be uploaded on system of KRA (KYC registration agency) within 10 days.
o Period of exclusion will be from March 23, 2020, till December 31, 2020.
o A 15-day time period after December 31 has been allowed to depository or depository
participants to clear the backlog.

6.4 MCX gets Sebi approval for launch of futures trading in natural rubber
• Recently, Multi Commodity Exchange of India Ltd (MCX) has received approval from markets
regulator SEBI for the launch of futures trading in natural rubber.

41 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 • Rubber futures contracts will be available for compulsory delivery for investors who are keen
to trade in rubber quality of 'Ribbed Smoked Sheets4' for a minimum lot size of 1 tonne.
• The price to be quoted will be for 100 kg as per the ex-warehouse rates, exclusive of all sales
and GST with the delivery centre at Palakkad in Kerala.

6.5 Lucknow Municipal Corporation raises Rs 200 crores on BSE muni bond listing
• Recently, Municipal bonds of the Lucknow Municipal Corporation (LMC) worth 200 crores
were listed at Bombay Stock Exchange.
• Lucknow has become the 9th city in the country to have raised municipal bonds.
• These bonds are incentivized by the Ministry of Housing and Urban Affairs, Government of
India under the mission AMRUT (Atal Mission for Rejuvenation and Urban Transformation).
• LMC will get ₹26 crores to subsidize its interest burden by 2%.
• The total issue of INR 100 crores (including green shoe option of up to INR 100 crores) attracted
considerable investor interest and received bids totaling to INR 450 crores from 21 investors.
• Coupon rate of 8.5% for a ten-year bond.
• It is the first municipal bond issue from North India and the first from Uttar Pradesh after the
launch of the AMRUT scheme.

6.6 Highlights of the 4th Bi-Monthly Monetary Policy

• Recently, RBI has released the updates on the 4th Bi-Monthly Monetary Policy.
Key Highlights of Report
• Reserve Bank of India (RBI) left benchmark interest rates unchanged and maintained an
‘accommodative’ policy stance as it prioritized support for the economy's recovery over
‘sticky’ inflation amid the COVID-19 pandemic.

Other Highlights
Domestic Economy
• Indian Economy showed a contraction of 7.5% in real GDP in Q2:2020-21 (July-September).
• Corporate bond issuances stood at ₹4.4 lakh crore during April-October 2020 as against ₹3.5
lakh crore during the same period last year.
• India’s foreign exchange reserves were US$ 574.8 billion (as on November 27)
Inflation Situation
• The CPI inflation rose sharply to 7.3 percent in September and to 7.6 percent in October 2020.

42 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
Outlook
• CPI inflation is projected at 6.8 percent for Q3 of FY 2020-21, 5.8 percent for Q4 of FY 2020-
21 and 5.2 to 4.6 percent in H1 of FY 2021-22, with risks broadly balanced.
• Real GDP growth is projected at (-) 7.5 percent in 2020-21. It is projected to grow at 0.1
percent in Q3 of FY 2020-21 and by +0.7% in Q4 of FY 2020-21.
• The real GDP is projected to be 6.5% in the first half of the fiscal year 2021-22 with a growth
of 21.9 percent.

6.7 SEBI issues guidelines for transfer, dematerialization of re-lodged physical shares
• Recently, Securities and Exchange Board of India (SEBI) came out with operational guidelines to
credit physical shares in Demat account of investors following re-lodged transfer request.
Key Highlights of Guidelines
• Subsequent to processing of re-lodged transfer request, the RTA (registrar to an issue and share
transfer agent) would retain physical shares and intimate the investor (transferee) about the
execution of transfer through a letter of confirmation.
• Letter will be sent through speed post or e-mail, with the digitally signed letter containing details
of endorsement, shares, folio of investor as available on physical shares
• The investor would have to submit the Demat request, within 90 days of issue of letter of
confirmation, to depository participant along with the letter of confirmation.
• The RTA would also issue a reminder at the end of 60 days of issue of letter of confirmation
• Depository participant will process the Demat request based on letter of confirmation.
• In case of shares that are required to be locked-in, the RTA will also intimate the depository about
the lock-in and its period.
• Shares would be in lock-in Demat mode for six months from the date of registration of transfer.
• In case of non-receipt of Demat request from the investor within 90 days of the date of letter of
confirmation, the shares will be credited to suspense escrow Demat account of the company.

6.8 Cabinet approves the proposal of SEBI to sign Bilateral MoU between India and Luxembourg
• Recently, Union Cabinet has given approval for signing Memorandum of Understanding (MOU)
between Securities & Exchange Board of India (SEBI) and Financial and Commission de
Surveillance du Secteur Financier (CSSF), Luxembourg.

6.9 AIFs can leverage without limits in IFSC

• Recently, GIFT City regulator IFSCA has removed several restrictions in current regulations on
Alternative Investment Funds (AIFs) operating in International Financial Service Centre (IFSC).
Key Highlights of Current Regulation
Leverage
• AIFs in GIFT City permitted to undertake leverage, subject to satisfaction of prescribed
conditions.
Investment
• Co-investment in portfolio companies permitted by AIFs in GIFT City through segregated portfolio,
provided the investment terms are not favourable than those offered to the common portfolio
and appropriate disclosures are made in the placement memorandum.
43 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
• AIFs in GIFT City permitted to invest in domestic AIFs, alongside other permissible investments.
Diversification
• Diversification limits under the AIF Regulations not applicable to AIFs in GIFT City, subject to
appropriate disclosures in the placement memorandum
Background
Leverage
• The SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”) restricts
Category-I / Category-II AIFs from borrowing directly or indirectly or engage in any leverage
except for meeting temporary funding requirements for not more than 30 days, on not more
than 4 occasions in a year and not more than 10% of the investible funds.
• Category-III AIFs are permitted to engage in leverage subject to consent from investors of the
fund and subject to maximum limit not exceeding 2 times of the Net Asset Value of the AIF.
Investment
• The AIF Regulations permit Category-I AIF to invest in units of other Category-I AIFs4 and
Category-II AIF to invest in units of other Category-I AIF / Category-II AIF. The AIF Regulations
provide that the AIF should only invest in such units and shall not invest in units of other Funds
of Funds.
Diversification
• Under The AIF Regulations, Category I and II AIFs cannot invest more than 25% of the
investable funds in one Investee Company and Category III AIFs cannot invest more than 10%
of the investable funds in one Investee Company.
About Leverage
• Leverage allows a fund to increase its potential gains, as well as losses, by using financial
instruments and/or borrowed money to increase the fund’s market exposure beyond its net
asset value.

6.10 IFSCA notifies International Financial Services Centres Authority (Bullion Exchange)
Regulations, 2020
• Recently, IFSCA notified the International Financial Services Centres Authority (Bullion Exchange)
Regulations, 2020.
• The regulations inter alia cover the Bullion Exchange, Clearing Corporation, Depository, and
Vaults.
• The regulations are divided into the 16 chapters.

6.11 SEBI bars entities from securities market for unauthorized investment advisory activities
• Recently, SEBI has barred three individuals and two entities from the securities market for carrying
out unregistered investment advisory activities.
• As per two separate interim orders, Equity Mania Financial Advisory and its proprietor -- Ankit
Goel, Money Streets Advisory Services LLP and its partners -- Zulfiqar Ahmed and Ifteqaar have
been directed to cease and desist from acting as investment advisors until further orders.

44 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
6.12 Burger King India makes remarkable market debut; shares jump over 92%
• Recently, Shares of Burger King India zoomed over 92% in its debut trade against its issue price of
₹60.
• Price range for the ₹810-crore initial public offering (IPO) was fixed at ₹59-60 per share.
• Investors seem to have fully favoured the Burger King India IPO, with the share sale getting
subscribed a massive 156.65 times on the last day of the offer.

6.13 NSE to launch derivatives contracts on Nifty Financial Services index

• Recently, The National Stock Exchange (NSE) announced to launch derivative contracts on the
Nifty Financial Services index.
• Derivative contracts on the Nifty Financial Services index will be only the third equity index.
• At present, NSE offers derivatives contracts for the benchmark Nifty50 and the Bank Nifty index.
• The Nifty Financial Services index comprises 20 stocks, mainly banks, non-banking financial
companies (NBFCs) and insurance stocks — including HDFC Bank, HDFC, ICICI Bank, and Kotak
Mahindra Bank.
• The Nifty Financial Services index has a 94% correlation with the Nifty 50 Index and 98% with the
Nifty Bank index.
Relevance
• Financial stocks have the biggest sectoral weight in the domestic stock markets. They account for
a third of the top 500 companies. It is also the biggest sector in terms of foreign investment. In
Nov 2020, nearly half of the $8 billion worth of foreign portfolio investment went into financial
stocks.

6.14 Bombay Stock Exchange launches e-agricultural spot market platform

• Recently, BSE has launched an electronic spot platform for agricultural commodities - "BSE E-
Agricultural Markets Ltd. (BEAM)" - through its subsidiary BSE Investments.
• Accordingly, the platform functions as a "national level, institutionalised, electronic, transparent
commodity spot trading platform.
Relevance
• With the help of BEAM, farmers in one state will be able to reach out to markets in other states
and auction their produce.

6.15 SEBI to have department to check price manipulation, misuse of IPO funds
• Recently, SEBI announced to have a separate specialised department, which will detect possible
irregularities in the utilisation of net proceeds and even do forensic accounting of such firms.
• The new wing will be known as the Corporate Finance Investigation Department.
• It will be headed by one of Sebi’s executive directors.
• The department will have information technology solutions experts, particularly to detect the
menace of frauds.
Background
• Sebi had found out that companies are now using various new methods to use IPO proceeds for
various porpose other than those stated in the draft papers.

45 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
• In the past, such matters are mostly taken care of by the corporate finance department. But now,
some of the ongoing serious cases will be handled by the new division.
Additional Information

6.16 SEBI defers T+1 settlement plan after opposition from foreign investors
• Recently, SEBI announced to defer the plan to half the trade settlement cycle to one day (T+1)
Following the opposition from foreign investors.
• At present, the domestic equity markets follow a T+2 settlement —the transfer of cash and
securities between the buyer and seller gets completed two days after the trading day.
Relevance of Moving to T+1 Cycle
• According to SEBI, shorter trade settlement cycle will help free up capital, make the markets more
efficient, and reduce the default risk faced by clearing corporations.

6.17 SEBI tweaks eligibility norms of companies relisting after CIRP process
• Recently, SEBI tweaked the eligibility norms of companies relisting after corporate insolvency
resolution process (CIRP) process.
• Companies relisting after the CIRP will need to have at least 5 per cent public shareholding, which
will need to be enhanced to 10 per cent within 12 months and 25 per cent within three years.
• At present, Sebi provides up to 18 months for companies’ listing under the CIRP to hike their MPS
to 10 per cent and another 18 months to take it to 25 per cent.

6.18 BSE, NSE, MCX gear up for India's first bullion exchange at Gift City
• Recently, the government has notified regulations for setting up the bullion exchange in Gift City
IFSC.
Key Highlights of Regulations
• The applicant seeking recognition as a bullion exchange or bullion clearing corporation, as the case
may be shall have a minimum net worth of 30 million USD.
• The promoter group to hold a maximum 51 per cent equity. This includes equity held by
consortium members of the promoter group (domestic or foreign exchange).
• The remaining share capital may be acquired or held by any other person (whether Indian or of
foreign jurisdiction) with a maximum cap of 5 per cent per investor.

46 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
6.19 SEBI approves doing away with Minimum Promoters’ Contribution towards FPO
• Recently, SEBI approved doing away with Minimum Promoters’ Contribution towards FPO of
specified securities subject to fulfilment of the following conditions:
1. The equity shares of the issuer are frequently traded on a stock exchange for a period of at
least three years
2. The issuer has been in compliance with the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 for a period of at least three years
3. The issuer has redressed at least 95% of the complaints received from the investors.
• Currently, promoters are mandated to contribute 20% towards FPO.

6.20 SEBI eases profitability criteria for mutual fund sponsors

• Recently, SEBI eased the profitability criteria for the mutual fund sponsors. According to it -
o Sponsors not fulfilling profitability criteria at the time of making application, will also be
considered eligible to sponsor a mutual fund.
o Sponsors need to have net-worth of not less than Rs 100 crore for the purpose of contribution
towards the net-worth of the Asset Management Company (AMC).
o Net worth of the AMC must be maintained till the time AMC starts making profit for five
consecutive years.
Background
• At present, a sponsor is required to have profits after providing for depreciation, interest and tax
in three out of the immediately preceding five years in order to be a Sponsor of an AMC.

6.21 SEBI comes out with new stress testing perimeters for commodity derivatives
• Recently, SEBI issued new stress testing perimeters for commodity derivatives in order to tackle
extreme volatile price events.
• Price movements of the last 15 years will be scanned for stress testing instead of 10 years at
present.
Relevance

47 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
• In recent times, extreme volatility has been observed in commodity prices globally especially
crude oil and current time period is not sufficient to cover the steep upward or downward price
variations in the futures market
About Stress Testing
• Stress testing is a risk management technique used in financial institutions and investment
portfolios to assess the capital level necessary to endure future financial situations.

6.22 SEBI suggests relaxing of norms to boost listing of start-ups

• Recently, SEBI has suggested relaxations in norms, including reducing holding period for pre-issue
capital and allowing discretionary allotment to all eligible investors.
• Accordingly, the regulator has issued a consultation paper in this regard and sought suggestions
from public till January 11, 2021.
Key Highlights of Suggestions
• Reducing the period of holding of 25 per cent of pre-issue capital of the issuer company by eligible
investors to one year from current requirement of two years.
• Up to 60 per cent portion of the issue size may be allocated on a discretionary basis, prior to issue
opening, to all eligible investors if there will be a lock in of 30 days on such shares.
• Continuation of special rights, such as board seat and veto or affirmative voting rights, for existing
institutional investors holding in excess of 10 per cent of capital.
• Exempt Alternative Investment Fund (AIF) Category II investors from post issue lock-in
requirement of six months.
• Delisting may be considered if 75 per cent of the total shareholding and voting rights are acquired
against the present requirement of 90 per cent.

6.23 Sovereign Gold Bond Scheme 2020-21 (Series IX) – Issue Price
• Recently, Government announced that Sovereign Gold Bonds 2020-21 (Series IX) will be opened
for the period December 28, 2020 - January 01, 2021 with Settlement date January 05, 2021.
• The issue price of the Bond during the subscription period shall be Rs 5,000 (Rupees Five thousand
only) – per gram
• Rs 50 per gram discount will be provided price to those investors who apply online and the
payment is made through digital mode. (I.e. Issue price will be Rs 4950/- per gram)

6.24 Implementation of CARO order deferred by one year: MCA

• According to a recent notification of Ministry of Corporate Affairs (MCA), the Companies
(Auditor’s Report) Order, 2020 would come into effect from financial years commencing on or
after April 1, 2021.
Background
• The new reporting regime of CARO 2020–which was introduced by MCA in consultation with
National Financial Reporting Authority in February 2020— had superseded CARO 2016.
• Under the new regime, an auditor was required to report/certify several details which was so
far not required to be certified. As many as 21 items required detailing in the new CARO-2020
• Under this stricter framework, auditors are required to provide detailed disclosures about
loan defaults, amount of cash losses and immovable properties as well as other aspects about
48 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
 companies in their annual reports, including whistle blower complaints and default in
repayment of borrowings
Applicability of CARO 2020
• It shall apply to every company including a foreign company as defined under Section 2(42)
of Companies Act, 2013 except:
• One Person Company, Small companies (Companies with paid up capital less than/equal to Rs
50 lakh and with a last reported turnover which is less than/equal to Rs 2 crore), Banking
companies
• Companies registered for charitable purposes, Insurance companies
• The following private companies are also exempt from the requirements of CARO, 2020:
o Whose gross receipts or revenue (including revenue from discontinuing operations) is
less than or equal to Rs 10 crore in the financial year
o Whose paid up share capital plus reserves is less than or equal to Rs 1 crore as on the
balance sheet
o Not a holding or subsidiary of a Public company
o Whose borrowings is less than or equal to Rs 1 crore at any time during the Financial
year
Relevance
• Move to defer the applicability of CARO 2020 by a financial year would come as a respite for
corporate India, which has been buffeted by challenges of business continuity since the Covid-
19 pandemic broke out
Additional Information
National Financial Reporting Authority
• NFRA was constituted on in 2018 under section 132 (1) of the Companies Act, 2013 and is an
independent regulator overseeing the auditing profession.
• The regulator will have a chairman, three full-time members, and one secretary.
• It will have the power to debar erring auditors or audit firm for up to 10 years.
• NFRA will also have powers to impose a fine of less than Rs.1 lakh

6.25 D-Street’s worst day in 7 months as investors lost Rs 1,850 crore per minute
• Stock market bulls, who had got accustomed to Sensex increasing every day, got an eye-opening
jolt on December 20, 2020 that saw destruction of Rs 6.89 lakh crore of investor wealth–nearly Rs
1,850 crore per minute.
• The primary trigger behind was a new much potent strain of coronavirus discovered in the UK.
• The 30-share pack Sensex crashed 1,406.73 points, down 3 per cent. In percentage terms, it was
its biggest fall in seven months. Its broader peer NSE Nifty plunged 432.15 points or 3.14 per cent
to 13,328.40.

6.26 PCMC & UNDP to launch India’s first social impact bond
• Recently, the Pimpri Chinchwad Municipal Corporation, Maharashtra has signed a MoU with the
United Nations Development Programme (UNDP), to co-create India’s first Social Impact Bond
(SIB).
• For the first time, a civic body would act as an ‘outcome funder’ in a bond.
49 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
• The SIB would help PCMC in improving healthcare services for the local residents.
About Social Impact Bond
• A social impact bond (SIB) is a contract with the public sector or governing authority, whereby it
pays for better social outcomes in certain areas and passes on the part of the savings achieved to
investors.
• Repayment and return on investment are contingent upon the achievement of desired social
outcomes.
• If the objectives are not achieved, investors receive neither a return nor repayment of principal.

6.27 SEBI exempts fund managers from placing orders for passive trades
• Recently, The Securities and Exchange Board of India’s (Sebi’s) has exempted fund managers from
placing orders for passive and arbitrage trades.
• AMCs needed to use an automated Order Management System (OMS), by which orders on equity
and equity-related instruments of each scheme are placed by the fund manager(s) of the
respective schemes.
• Sebi now has allowed the fund manager to authorize an employee of the AMC for order placement
on his behalf provided the order instructions are through the electronic mode, including email,
and an audit trail is maintained.
• Cases of arbitrage transactions, stock lending and borrowing transactions, passive schemes such
as index funds and ETFs and schemes investing primarily based on pre-defined rules and models -
- where the discretion of the fund manager is not required for placement of order --- is not
mandated to be placed through the OMS.
• SEBI has also extended the date for the uniform applicability of Net Asset Value in respect of
purchase of units of mutual fund schemes upon realization of funds to February 1 from January
1, 2021
• Currently, NAV for allocation of mutual fund units is based on investment amount as follows:
o For investment below ₹2 lakh, allotment of units is based on time of receipt of application
within the cut-off time.
o In case, the ticket size is above ₹2 lakh, mutual fund houses allot units when the scheme
receives investor funds in their account.

7 SEBI in News

7.1 SEBI adds new payment modes for call money for partly paid securities
• Recently, SEBI introduced additional payment mechanism, including ASBA, for making
subscription and payment of balance money for calls in respect of partly paid securities issued
by listed entities.
• The additional payment methods provided by Sebi are online as well as physical ASBA and the
facility of linked online trading, demat and bank account (three-in-one type) account offered by
some brokers.
• Period for payment of balance money in calls will be kept open for 15 days.

50 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
• It will be applicable for all call money notice wherein the payment period opens on or after
January 1, 2020.
Additional Information
• Sebi had introduced ASBA as the sole payment mechanism in the IPO and rights issues.
About Call
• A call, in market parlance, is a demand made by the company on its shareholders to pay whole or
part of the balance remaining unpaid on each share at any time during the life time of a company.

7.2 SEBI puts in place mechanism to ease e-voting process

• Recently, SEBI came out with a mechanism to make the e-voting process more secure, convenient
and simple for shareholders.
• SEBI has enable e-voting for all Demat account holders by way of a single login credential through
their Demat accounts and websites of depositories.
• Shareholders can directly register with depositories wherein they would be able to access the e-
voting page of various ESPs through the websites of the depositories without further
authentication by ESPs.
• Alternatively, Demat account holders will have the option of accessing various ESP portals directly
from their Demat accounts.
• Enhanced security features like One Time Password (OTP) validation will be introduced.
• It will be implemented in a phased manner with Phase 1 completing in 6 months and phase 2 in
12 months.
Background
• Currently, there are multiple ESPs providing e-voting facility to listed entities in the country. This
necessitates registration on various ESPs and maintenance of multiple user IDs and passwords by
the shareholders.

7.3 SEBI issues new framework for core settlement guarantee fund, non-defaulting members
[Primary and Secondary Market]
• Recently, SEBI has issued norms referring to core settlement assure fund (SGF), stress testing and
default waterfall process for Limited Purpose Clearing Corporation (LPCC)
About Core Settlement Guarantee Fund (SGF)
• SGF is a corpus used for settlement of trades during defaults and all intermediaries -- stock
exchanges, clearing corporations and brokers -- contribute towards it.
• Contributions to Core SGF by various contributors for any month will be made before start of the
month.
• Contribution of issuers of debt securities to core SGF shall be equivalent to 0.5 basis points of
the issuance value of debt securities per annum.
• Contribution towards replenishment of Core SGF by the members would be restricted to only
once during a period of 30 days.
• In the event of usage of Core SGF during a month, the contributors shall, immediately replenish
the Core SGF to minimum required corpus.
• If there is failure on part of some contributor to replenish its contribution, same would be
immediately met, on a temporary basis by-- clearing corporation and stock exchange.
51 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
The regulator has put in place for stress testing of Limited Purpose Clearing Corporation (LPCC).
• Stress testing is a risk management technique used in financial institutions and investment
Portfolios to assess the capital level necessary to endure future financial situations.
Also, the regulator has prescribed default waterfall process
• Default waterfall procedure, whereby Clearing Corporation applies different types of its
financial resources to meet a default loss, such as margins brought in by defaulting participant,
clearing funds and its own assets.
• In case of default, the first to be used would be the money of defaulting member including its
primary contribution to core SGF. Then, the core corpus comprising of penalties, previous financial
years profit of LPCC transferred to core SGF, remaining core SGF as well as LPCC resources and
contribution of non-defaulting members would be used.
• Corporations need to call for the capped additional contribution only once a month regardless of
the number of defaults during the period.
o The maximum capped additional contribution by non-defaulting members shall be lower of 2
times of their primary contribution to Core SGF or 10 per cent of the Core SGF of the segment
on the date of default in case of equity or debt segments
o With regard to derivatives segments, maximum capped additional contribution by non-
defaulting members would be lower of 2 times of their primary contribution to Core SGF or
20 per cent of the Core SGF of the segment on the date of default.

7.4 SEBI offers certain relaxations to NRIs on holding depository receipts

• Recently, SEBI gave certain relaxations to non-resident Indians in respect of holding of depository
receipts (DRs) issued by India-listed companies.
• NRIs can now hold DRs issued by the company under the employee stock option schemes, bonus
issue and rights issue.
• In October 2019, SEBI barred NRIs from buying DRs issued by India-listed companies.
• Except as permitted under the provision above, NRIs shall neither subscribe to any further issue
of DRs nor make any further acquisition of DRs

7.5 SEBI permits transfer of bourses' excess contribution from core SGF
• Recently, SEBI has given the green light for transfer of excess contribution by exchanges, from
core settlement guarantee fund (SGF) of one clearing corporation to another, in an inter-operable
scenario.
• Following the receipt of request from an exchange, the clearing corporation that receives such a
request will transfer directly excess contribution of the exchange to the core SGF of another
clearing corporation, under intimation to that bourse.

7.6 SEBI comes out with timeline for refunding trading members' security deposit
• Recently, SEBI came out with a timeline for exchanges regarding refund of security deposit on
surrender of membership by trading members.
• Exchanges need to release the security deposit after three years from the date of receipt of
surrender application by the exchange or five years from the date of disablement of Trading
Members (TM’s), whichever is earlier.

52 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
• SEBI has also given a timeline for refund of security deposit of TMs engaged only in proprietary
trading.
o The exchange shall release security deposit after one year from the date of receipt of
surrender application or three years from the date of disablement.

7.7 SEBI issues 'procedural' guidelines for proxy advisory firms

• Recently, SEBI issued 'procedural' guidelines for proxy advisory firms.
• Proxy Advisors shall alert clients, within 24 hours of receipt of information, about any factual
errors and any impending material revisions to their reports.
• Further, any such material revisions to their reports shall be communicated to the clients within
72 hours of receipt of the information, while ensuring that adequate time is available for clients
to make an informed decision.
About Proxy Advisors
• Proxy advisory firms are independent research outfits that evaluate the pros and cons of
corporate matters such as mergers, acquisitions, top appointments and CEO pay, which
shareholders are expected to vote on in AGMs, EGMs or court-convened meetings.

7.8 SEBI notifies Alternative Investment Funds (Amendment) Regulations, 2021

• Recently, SEBI notified the Securities and Exchange Board of India (Alternative Investment
Funds) (Amendment) Regulations, 2021 to further amend the Securities and Exchange Board of
India (Alternative Investment Funds) Regulations, 2012.
• The Amendment is brought under regulation 20 which specifies the general obligations in which
the Manager shall be responsible for investment decisions of the Alternative Investment Fund.
i. The members of Investment Committee shall be equally responsible as the Manager for
investment decisions of the Alternative Investment Fund.
ii. The Manager and members of the Investment Committee shall jointly and severally ensure
that the investments of the Alternative Investment Fund are in compliance with the provisions
of the regulations, the terms of the placement memorandum, agreement made with the
investor, any other fund documents and any other applicable law.
• The above two clauses shall not apply to an Alternative Investment Fund in which each investor
other than the Manager, Sponsor, employees or directors of the Alternative Investment Fund or
employees or directors of the Manager, has committed to invest not less than seventy crore
rupees (or an equivalent amount in currency other than Indian rupee) and has furnished a waiver
to the Alternative Investment Fund in respect of compliance with the said clauses, in the manner
specified by the Board.

7.9 SEBI extends certain compliance timelines for trading, clearing members
• Recently, SEBI has extended timelines for compliance with certain regulatory requirements by
trading members and clearing members in view of the prevailing situation due to the coronavirus
pandemic.
• The deadline for maintaining call recordings of orders or instructions received from clients has
now been extended till February 28, 2021.

53 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241
• As per the norms, KYC (Know Your Customer) application form and supporting documents of
clients need to be uploaded on a system of KRA (KYC Registration Agency) within 10 days.
• The period of exclusion will be from January 1, 2021 to February 28, 2021. A 15-day period after
February 28 will be given to clear the backlog.
• Stock exchanges and Clearing Corporation have been asked to direct their members to clear the
backlog, if any, by January 31, 2021, with regard to KYC application form and supporting
documents of the clients to be uploaded on system of KRA by the members.
• New due diligence requirements for debenture trustees relating to creation of security in issuance
of listed debt securities will now apply from 1 April, 2021

7.10 SEBI Eases Software Testing Requirement

• Recently, SEBI has relaxed the requirement of mandatory mock trading sessions to facilitate
testing of new software or existing software that has undergone any change of functionality in
certain conditions.
• Testing of new software or existing software will be optional if a stock exchange provides suitable
simulated test environment to test such software and ensures the test environment will be made
available to all the members.
• Stock Exchanges need to ensure that the test environment will be made available for at least two
hours after market hours and at least on two trading days in a week.
• For the purpose of testing, stock exchange will make available data from at least one trading day
in all segments and the same will not be older than one month from the day of the testing
environment

54 | P a g e W W W . E D U T A P . C O . I N QUERY? [email protected] /
8146207241