Corporate Law Daily
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Corporate Law Daily

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Today’s newsletter analytically summarizes the top Corporate Law stories reported at?taxmann.com .

SEBI includes Equity Exchange Traded Funds in list of eligible securities under Margin Trading Facility

Circular No. SEBI/HO/MRD/MRD-PoD-3/P/CIR/2022/166, Dated 30.11.2022

SEBI vide. Circular dated 13.06.2017 issued a comprehensive framework for Margin Trading Facility. Now, based on various feedbacks from market participants, SEBI has decided to allow units of Equity Exchange Traded Funds categorized as Group-I security as an eligible security for MTF as well as an eligible collateral under MTF.

Also, now Equity shares and units of Equity ETFs that are classified as 'Group I security' as per SEBI circular dated 23.02.2005 shall be eligible for MTF. Further, the format for disclosure by the stock broker to the stock exchange on gross exposure towards MTF has been modified to include information with regard to MTF for units of Equity ETFs. SEBI has also clarified on sources of funds for the purpose of providing the MTF.

The provisions of this circular shall come into force with effect from 29.12.2022.

SEBI reduces the timeline for listing of Non-convertible Securities, Securitised Debt Instruments, etc. to T+3 days

Circular No. SEBI/HO/DDHS/DDHS_Div1/P/CIR/2022/167, Dated 30.11.2022

The Operational Circular dated 10.08.2021, prescribes provisions pertaining to timelines for the listing of Non-convertible Securities, Securitised Debt Instruments, Security Receipts and Municipal Debt Securities, issued on a private placement basis.

Now, in order to bring about clarity and standardization in the process of issuance and listing of such securities, on a private placement basis, a list of the steps involved, pre-listing and post-listing, and relevant timelines have been detailed, both through Electronic Book Provider (EBP) platform and otherwise, the SEBI has reduced the timeline for listing from T+4 days to T+3 days (T refers to issue closure date).

Further, Recognized Stock Exchanges and Depositories are being directed to put in place the necessary systems and infrastructure for implementation of this circular, monitor compliance, etc. The provisions of this circular shall come into effect from January 1, 2023.

SEBI introduces the mechanism of Net Settlement of cash segment and F&O segment upon expiry of stock derivatives

Circular No. SEBI/HO/MRD2_DCAP/P/CIR/2022/165, Dated 30.11.2022

With a view to providing better alignment of cash and derivatives segment, mitigation of price risk, etc. SEBI has decided, in consultation with the Secondary Market Advisory Committee (SMAC) of the SEBI, to introduce the mechanism of Net Settlement of the cash segment and F&O segment upon expiry of stock derivatives against the current approach of settling such obligations separately.

Also, the SEBI clarified that netting of settlement obligations of the cash segment and physical settlement of the F&O segment should not be available for the institutional investors (including all categories of Foreign Portfolio Investors) since the extant regulatory framework specifies that all transactions by the institutional investors (including all categories of Foreign Portfolio Investors) in cash market should be backed by delivery.

This benefit shall be available to investors whose trading member clears trades in the F&O segment and cash segment through the same clearing member. Further, netting of delivery obligations shall be only for the purpose of settlement. Therefore, Securities Transaction Tax (STT) and Stamp Duty shall continue to be computed, levied and reported on a segment-wise level.

That’s it from us for today! Stay Tuned for more updates from?Taxmann.com

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