Capital Markets
Investor Protection
Change: Sebi to review TER charged by AMCs to mutual fund investors.
Impact: Greater transparency and benefits to investors. At present, slab-based TER is applied on schemes, besides brokerage, transaction costs, GST, and advisory fees. The review will consider a TER limit and charges levied on investors for distribution commission from B-30 cities.
Change: Sebi to strengthen grievance mechanism through Sebi Complaint Redressal System or SCORES and online dispute resolution.
Impact: Will make grievance redressal process comprehensive, faster, and more efficient by providing a system of auto-routing and auto-escalation. Will allow investors to choose two levels of review and access the online resolution mechanism.
Change: Mandatory for stockbrokers to display “risk disclosures” on their websites for individual traders in the equity futures and options segment and inform them about risks in stock investing, effective July 1, 2023.
Impact: Will facilitate informed decision-making by investors in the derivatives segment, although they would need to decide based on their due diligence and risk appetite.
Strengthening Oversight
Change: Sebi asks AMCs and Amfi to upgrade internal mechanisms to deter misconduct by employees, entities.
Impact: Will likely help prevent fraud and market abuse, and increase the accountability of the AMC employees. Will also aid in strengthening surveillance, oversight, and compliance by staff members.
Change: Sebi moots Prohibition of Unexplained Suspicious Trading Activities in Securities Market Regulations, 2023.
Impact: Will help identify person or a group when their trading pattern is found suspicious or remains “unexplained”, leading to repetitive “abnormal” gains in securities.
Ease Of Processes
Change: Sebi proposes cutting IPO listing time from six to three days; removing inconsistency in submission of applications from NIIs, QIBs.
Impact: Change complements Sebi’s introduction of UPI as an additional payment mechanism for individual mutual fund investors. Applicant’s money is blocked in real time in their bank accounts for electronic applications. Will lead to ease for investors and boost efficiency of issuers. However, self-certified syndicate banks may need more time to upload and bid on these applications on the stock exchange. So, it has set a 4 pm deadline, instead of the earlier 5 pm, on the closing day for accepting electronic applications to address the issue.
Sebi: Securities and Exchange Board of India; NII: Non-Institutional Investor; QIB: Qualified Institutional Buyer; IPO: Initial Public Offering. KYC: Know Your Customer; Amfi: Association of Mutual Funds in India; TER: Total Expense Ratio; AMC: Asset Management Company;
Source: OLM Research
Insurance
Innovation
Change: Constitution of five-member expert committee on mental health and insurance.
Impact: Will advise Irdai on matters related to mental health and insurance and on coverages to be offered under insurance products for mental illness. The panel will also provide expert advice on terminology and concept from the medical and insurance domain perspective.
Change: Formation of 12-member task force for facilitating ease of doing KYC using Aadhaar.
Impact: The task force will suggest measures to ease onboarding of customers using Aadhaar. It will improve the traceability of customers and/or beneficiaries to reduce unclaimed amounts of policyholders, steps for fraud management at underwriting, and claims stages, among others.
Policyholder Protection
Change: Irdai directs insurers to provide comprehensive insurance cover for surrogate mothers and oocyte donors in complaince wityh Surrogacy (Regulation) Act, 2021.
Impact: The policy is proposed to cater to their specific requirements, and needs to be sufficient to cover all expenses for all complications arising out of the treatment process. This aims to ensure their well-being and financial protection.
Change: Irdai instructs life insurers to stop accepting credit card for repayment of loan granted against insurance policies.
Impact: It is in the best interest of the policyholders and supports responsible financial planning as interest rates on the policy loan are much lower compared to credit card rates, if those are availed.
Ease Of Doing Business
Change: Irdai proposes to amend rules on insurance advertisements.
Impact: The proposal to modify existing advertisement regulations from “rule-based” to “principle-based approach” aims to promote self-regulation by insurers. It proposes to do away with the requirement of filing every ad with the regulator and, thus, ease out regulatory requirements.
Irdai: Insurance Regulatory and Development Authority of India; Source: SecureNow Insurance Broker
Retirement
Pensioners’ Ease
Change: PFRDA allows NPS subscribers to buy multiple annuities at the time of exit.
Impact: Will provide subscribers a wider range of annuity options to help optimise their retirement income. The option will be available to subscribers whose annuity corpus is over `10 lakh, where `5 lakh is used to buy each annuity scheme.
Change: PFRDA has advised POPs, CRAs, and the NPS Trust to adhere to the June 30 deadline for linking PAN with Aadhaar.
Impact: The advice reiterates the Central Board of Direct Taxes’ (CBDT) earlier circular making it mandatory for taxpayers to link their PAN cards with Aadhaar by June 30, 2023, failing which PAN will be inoperative.
PFRDA: Pension Fund Regulatory Development Authority; NPS: National Pension System; CRA Central Record Keeping Agency; POP: Point of Presence; Source: OLM Research