Page 18 - Banking Finance February 2023

MUTUAL FUND

Mutual Fund

News

SEBI proposes rules for in- ternational Organization of Securities As per the provisions, trading mem-
Commissions (IOSCO) principles once in bers, upon facing technical glitches
dex providers
two years, as per the proposed regu- which lead to disruption of trading ser-
The markets regulator said the index lations. vices, can request for enablement of
provider shall be a legal entity incor- the IRRA service.
porated under Companies Act in the
Sebi asks exchanges to set
country of origin and should have a Demat accounts rise 34%
minimum net worth of Rs 25 crore. up Investor Risk Reduction
to 10.8 crore in December
The index provider will have to consti- Access platform
The number of demat accounts rose to
tute an oversight committee for re- Markets regulator Sebi asked stock
10.8 crore in December 2022, a surge
viewing existing index design. The exchanges to set up an Investor Risk
of 34 per cent on yearly basis, on at-
committee will also review any pro- Reduction Access (IRRA) platform to
tractive returns from the equity mar-
posed changes to benchmark method- give investors an opportunity to square
kets, ease of account opening process
ology. The regulations said the index off their position or cancel pending
and increased financial savings.
provider must have policies and proce- orders in case of disruption of trading
dures to manage conflicts of interest services provided by trading members. Also, the incremental account addi-
and to protect the integrity and inde- tions of such accounts were higher in
It said in recent times, with increasing
pendence of various functions per- December in comparison with the pre-
dependence on technology in the se-
ceding three months, however, below
formed in connection with determina- curities market, there is a rise in in-
the financial year 2021-22 (FY22) aver-
tion of indices.
stances of glitches in trading members'
age run-rate of 29 lakh.
In case an index provider is engaged in systems, some of which lead to disrup-
any other activity, the activity of index tion of trading services and investor The incremental additions of such ac-
provider in general and the benchmark complaints. counts were 21 lakh in December
2022, compared to 18 lakh each in
determination process in particular "A joint platform to provide Investor
October and November and 20 lakh in
must be completely ring-fenced to pre- Risk Reduction Access (IRRA) service
September, according to an analysis by
vent sharing or leakage of any sensitive shall be developed by the exchanges to
Motilal Oswal Financial Services.
information, Sebi said. Index provider provide the investors an opportunity to
must document and make available square off/close the open positions This decline is mainly due to volatility
publicly, the methodology for index and/or cancel pending orders in case seen in 2023 on account of Russia-
calculation. The index providers must of disruption of trading services pro- Ukraine war, high-interest rate envi-
be assessed by independent external vided by the trading member," Sebi ronment and rising inflation and hawk-
auditors to evaluate adherence to In- said in a circular. ish US Federal Reserve policies,

16 | 2023 | FEBRUARY | BANKING FINANCE