Stock exchanges to introduce investor risk reduction access platform in FY24: SEBI

After its board meeting on Tuesday, the Securities and Exchange Board of India (SEBI) said that stock exchanges shall introduce an investor risk reduction access platform in the next fiscal.

The investor risk reduction access platform is expected to be available from the third quarter of FY 2023-24, the market regulator says, adding that a detailed framework for the platform shall be issued by way of circular.

The new platform aims to provide investors a facility to reduce the risk of open positions or pending orders during periods of disruption in services of their broker.

"In the event of disruption of trading services provided by a broker, clients face significant risk if they are unable to square off their open positions and / or cancel orders pending at the stock exchange, particularly when the markets are volatile," SEBI says.

The SEBI board also approved amendments to the SEBI (Stock Brokers) Regulations, 1992 to designate large stock brokers as Qualified Stock Brokers (QSBs).

"Certain stock brokers in the market handle a very large number of clients, very large amount of client funds and very large trading volumes. Possible failure of such brokers has the potential to cause widespread impact on investors and reputational damage to the Indian securities market," says SEBI.

Qualified Stock Brokers would need to comply with enhanced risk management practices requirements, the market watchdog says.

The SEBI board also approved phasing out of share buyback through the stock exchange route in a gradual manner. The regulator increased the minimum utilisation of the amount earmarked for buyback through the stock exchange route from existing 50% to 75%. A SEBI sub-group, headed by HDFC vice-chairman and CEO Keki Mistry, had earlier proposed that the minimum threshold of 50% can be increased to 75%. This, according to SEBI, will prevent companies from announcing buybacks in cases where there is no real intention to complete the buyback for the entire amount.

The market regulator said it will create a separate window on stock exchanges for undertaking buyback till the time buyback through stock exchange is permitted.

For share buyback through the tender offer route, SEBI reduced the timeline for completion of buyback by 18 days by removing the requirement of filing a draft letter of offer with SEBI, and reducing the duration of the tendering period and period available for payment of consideration to the shareholders. The market watchdog permitted upward revision of buy-back price until one working day prior to the record date.