The Securities and Exchange Board of India (SEBI) has introduced amendments to its reporting requirements with the issuance of circular SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2024/03 dated January 12, 2024. While the circular eliminates certain reporting mandates, it retains critical provisions to ensure the safeguarding of client funds.
Key Highlights:
Discontinuation of 'G-principal' Reporting: SEBI's latest circular eliminates the obligation for market participants to report. This decision comes after receiving representations from various stakeholders citing inefficiencies due to duplication of monitoring mechanisms and is intended to alleviate reporting burdens for stakeholders.
In alignment with the objective of enhancing ease of doing business and eliminating redundancies, SEBI has modified specific clauses of its master circular as follows:
Clause 15.5.2 has been deleted, signaling the cessation of reporting requirements related to specific aspects of client funds.
·Clause 15.5.3 has been modified to emphasize the 'G Principle,' wherein stock exchanges are mandated to establish a vigilant monitoring mechanism for clients' funds with stockbrokers.
Emphasis on Compliance Mechanisms: While easing this specific reporting mandate, SEBI underscores the imperative for stock exchanges to institute alternative mechanisms ensuring compliance with the overarching objective of safeguarding client funds. Exchanges are directed to implement robust monitoring frameworks, ensuring that available funds—comprising cash and cash equivalents—with stockbrokers and clearing corporations consistently meet or exceed clients' ledger balances.
Immediate Implementation: The provisions of this circular are effective immediately. Stock exchanges are mandated to disseminate these changes to stockbrokers, update their operational guidelines, amend relevant bye-laws, and report the status of implementation to SEBI promptly.