SEBI Introduces ‘Summary Proceedings’: Key Changes to the SEBI (Intermediaries) Regulations, 2008
SEBI Introduces ‘Summary Proceedings’: Key Changes to the SEBI (Intermediaries) Regulations, 2008
Introduction
On 04 December 2024, the Securities and Exchange Board of India (SEBI) introduced the Securities and Exchange Board of India (Intermediaries) (Second Amendment) Regulations, 2024 (available here) amending the SEBI (Intermediaries) Regulations, 2008. The amendment introduces summary proceedings under Regulation 30A, streamlining the regulatory process for specific violations and ensuring swift enforcement of compliance within the securities market.
Key highlights of Regulation 30A
- Grounds for proceedings:
- Summary proceedings apply to intermediaries such as stockbrokers, clearing members, and depository participants, as well as other persons who:
- Have been expelled by all exchanges or clearing corporations.
- Had their agreements with depositories terminated.
- Made unauthorized claims regarding returns or performance of securities.
- Failed to pay fees to SEBI or other specified bodies.
- Are untraceable at their registered address or email.
- Failed to submit periodic reports for three consecutive periods.
- Admitted to violations of securities laws or SEBI directives.
- Summary proceedings apply to intermediaries such as stockbrokers, clearing members, and depository participants, as well as other persons who:
- Notice and response:
- SEBI will issue a notice to the intermediary or person, outlining the violations and grounds for initiating proceedings.
- The noticee must respond in writing within 21 calendar days, providing evidence or justification. An extension of up to 15 days may be granted at SEBI’s discretion.
- No further extensions or opportunities for personal hearings will be provided.
- Time-bound decision:
- SEBI aims to conclude proceedings within 21 calendar days of receiving the response or the expiry of the submission period.
- No opportunity of personal hearing shall be granted while disposing of the proceedings initiated under SEBI (Intermediaries) Regulations, 2008.
- Based on the findings, SEBI can issue orders for suspension, cancellation of registration, or other measures deemed necessary.
- Post-order compliance:
- Intermediaries whose registration is cancelled must cease all related activities, transfer operations to other registered entities, and ensure investor interests are safeguarded.
- They are also required to make arrangements for maintaining records, resolving investor grievances, and transferring funds or securities.
- Transparency and communication:
- Orders will be communicated to the affected intermediary or person, relevant market entities (such as exchanges and depositories), and published on SEBI’s website.
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