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Murphy and Turk foresee another happy new year for gold investors
Indian Exchange Board Approves Gold EFTs
The Hindu, Chennai (Madras)
Friday, December 30, 2005
http://www.thehindubusinessline.com/2005/12/31/stories/20051231037401
00.htm
MUMBAI -- The Securities and Exchange Board of India (SEBI) on
Friday announced key decisions, including introduction of optional
grading of IPOs to provide "additional comfort" to investors and
allowing mutual funds to launch gold exchange-traded funds, which
would aid small investors to own gold through mutual fund units.
The SEBI has also decided to do away with repetitive disclosures for
follow-on public offerings and rights issues by companies with
satisfactory track records in their filings with stock exchanges.
Announcing the decisions after the SEBI board meeting today, Mr. M.
Damodaran, Chairman, said that it has decided to extend the facility
of public issue refunds through ECS.
To begin with, ECS as a mode for refunds will initially be done
through 15 centres across India where clearing is done by the
Reserve Bank of India. This will be extended to other centres later.
The SEBI has also decided to resume fresh registration for obtaining
unique identification number (UIN). However, UIN will be mandatory
only for investors with trade value of over Rs 5 lakh.
Another key decision by the SEBI relates to the amendment in
takeover regulations to enable corporate restructuring. Mr.
Damodaran said that restrictions on market purchases and
preferential allotments under the takeover regulations have been
removed.
The SEBI has also hiked the position limit for stock-based
derivatives of trading members, based on the recommendation of the
Secondary Market Advisory Committee.
Explaining the rationale for allowing optional grading of IPOs, Mr.
Damodaran said that this would give "additional comfort" for first-
time investors in the capital markets.
The expenditure for such grading would be borne by outside agencies
like the Investors Protection Fund or the exchanges themselves, he
added.
However, once the companies decide to go for grading, the results
have to be publicised.
The rating agencies have agreed to undertake this task. "Grading
will help investors in taking informed decisions in the years
ahead."
On allowing mutual funds to launch gold exchange-traded funds, Mr.
Damodaran said that an expert committee under the SEBI had
recommended that mutual funds follow two models -- mutual fund
custodian bank integrated model and mutual fund warehouse receipt
model.
In the first model, gold is physically held by a custodian bank on
behalf of a mutual fund; in the second, gold warehouse receipts are
held by a custodian bank on behalf of the fund.
Ruling out any extension of the deadline for the Clause 49 regime,
Mr. Damodaran said that the SEBI board has made certain
clarifications in the clause.
As per this, the maximum time gap between two board meetings in
companies has been increased from three months to four months.
Secondly, the sitting fees paid to non-executive directors as
authorised by companies Act, 1956 would not require the approval of
shareholders.
* * *
Sebi Proposes Short Sales by Institutions
The Indian Express, New Delhi
Friday, December 30, 2005
http://www.indianexpress.com/full_story.php?content_id=84951
MUMBAI -- The stock market regulator Securities and Exchange Board
of India (Sebi) has proposed permitting institutional investors to
sell shares short to provide a level playing field to all classes of
investors.
An advisory committee of the Sebi said short selling of equities may
be allowed initially in those stocks in which derivative instruments
like stock futures and stock options are available.
Sebi currently allows only retail investors to sell short -- the
practice of selling securities you do not own in anticipation you
can buy them back cheaper at a later date.
Currently, there is a ban on investors such as banks, mutual funds,
insurance companies, and foreign institutional investors from
selling shares short. They are required to settle on the basis of
delivery of securities owned and held by them.
Sebi's Secondary Market Advisory Council, in a discussion paper,
said institutions seeking to short-sell would mandatorily have to
honour the obligation of delivering the securities at the time of
settlement. The panel suggested institutions may also be prohibited
from intra-day trading or squaring off their transactions intra-day.
"All transactions would be grossed for institutional investors at
the custodians' level and the institutions would be required to
fulfil their obligations on a gross basis," the committee said.
The Sebi panel also recommended introduction of lending and
borrowing in securities to facilitate short sales. "In the absence
of vibrant market for securities lending and borrowing, short
selling may not work effectively," the committee said.
"The introduction of a full-fledged securities lending and borrowing
scheme should be simultaneous with the introduction of short selling
by the institutional investors," it said.
The committee has recommended that the institutional investors would
be obligated to disclose upfront at the time of placement of order
whether the transaction is a short sale and demonstrate their
ability to borrow to the satisfaction of the broker. However, the
retail investors would be permitted to make a similar disclosure
before the end of the trading hours on the transaction day.
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