Sebi board clears tighter disclosure rules for top brass

THE BOARD OF the Securities and Exchange Board of India (Sebi) approved on Monday sweeping changes to the conflict-of-interest rules for its officials to improve transparency, especially among the top management. In addition, it allowed netting of investments for foreign portfolio investors (FPIs) in the cash market - a move that will cut funding costs and reduce liquidity demand.

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Among the key changes to the conflict-of-interest rules, the chairman and whole-time members' investments in equity and equity-related investments (except for mutual funds and other pooled instruments) have to be liquidated or frozen at the time of joining. They can also sell through a trading plan or sell with prior approval.

Also, new investments in regulated products should not exceed 25% of their financial portfolio. If this limit is breached, the respective party will have to recuse from all matters involving that particular intermediary.

Sebi officials and employees are also recommended to make initial, annual, and event-based disclosures of assets, liabilities, trading activities and relationships to the regulator. All investment restrictions will also be applicable to their spouses and dependent family members.At present, Sebi employees are permitted to invest in mutual funds, but not in stocks. However, no such restrictions are in place for their spouses, which will now likely change.