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SEBI's Secondary Market Advisory Committee (SMAC) met this week to review proposals aimed at strengthening India's trading ecosystem. Key discussions included revising broker position limits in equity derivatives, with a plan to raise end-of-day index futures limits from INR 500 crore to INR 1,500 crore and add a new intraday cap of INR 2,500 crore. Governance reforms for Market Infrastructure Institutions were also discussed, including appointing two independent Executive Directors to oversee compliance and operations, and linking top officials' variable pay to accountability standards. Other proposals included refining IPO price discovery mechanisms and introducing systematic withdrawal and transfer options for mutual fund investors.
A key committee of India's capital markets regulator, the Securities and Exchange Board of India (SEBI), convened on Tuesday to discuss and review a series of proposals aimed at enhancing the safety and efficiency of the country's trading ecosystem. The Secondary Market Advisory Committee (SMAC) met with a packed agenda that included everything from refining broker position limits to strengthening the governance of exchanges and improving convenience for mutual fund investors. The wide-ranging discussions are a direct response to the increasing complexity and scale of the Indian securities market. Advertisement
One of the central items on the agenda was a review of position limits for brokers in the equity derivatives segment. The committee is considering introducing new intraday position limits for index derivatives to better reflect actual market risk. For index futures, a significant proposal is to increase the end-of-day limit from INR 500 crore to INR 1,500 crore, with a new intraday limit of INR 2,500 crore. This change is designed to enhance risk monitoring and provide trading members with more flexibility in managing their positions.
Another major focus of the meeting was to strengthen the governance framework of Market Infrastructure Institutions (MIIs), which include stock exchanges and clearing corporations. The proposals under consideration aim to ensure that MIIs, which serve as first-line regulators, prioritize public interest over commercial objectives. This includes a plan to mandate the appointment of two independent Executive Directors on the governing board, each heading separate key verticals focused on critical operations and compliance. The committee is also reviewing the variable pay of top officials at MIIs, with a focus on linking compensation to accountability and governance standards.
Furthermore, the committee examined a proposal to review the Special Pre-Open Session mechanism for IPOs and relisted shares. This session, which takes place on the first day of trading, is designed to facilitate transparent price discovery. The review aims to address concerns over price volatility and improve the initial trading experience for newly listed securities. For retail investors, the committee also considered a proposal to introduce a systematic withdrawal and transfer facility for mutual fund units held in demat form, a move that would provide greater flexibility and streamline the management of their holdings.
Source- PTI
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