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Review compliance obligations for EoDB in capital market, says report

Review of compliance obligations required by market intermediaries and participants for trading in stock markets will help in enabling the ease of doing business (EoDB) in capital markets, according to a report released last week.

Currently, trading in stock markets require market intermediaries and participants to fulfil a number of compliance requirements. The review of compliances will reduce the cumbersome paper work for retail investors, encourage broader participation and democratise prosperity and make Indian markets attractive to global investors, says the report.

In addition, it will enable market intermediaries to focus on serving customers and growing their businesses and also help in unlocking the potential value for listed companies.

“Due to rapid innovation and development, there is a scope for review and reconsideration of several requirements that effectively do not add significant value to the markets or market participants,” said Association of National Exchanges Members of India (ANMI) president, Vijay Bhushan, at the launch of executive summary of Compliance Review Report 2020. The report was launched by the Minister of State for Finance Anurag Thakur.

The report is aimed at ensuring ease of trading by reviewing all compliance requirements to trade in stock markets on the basis of four criteria, addressing outdated and duplicate compliances, clarity on conflict compliances and bringing rationale to compliance system.

It has been prepared after the finance ministry, through a communication to markets regulator Sebi, advised to submit a “comprehensive review of compliance requirements” via national exchanges and ANMI.

“The report marks the beginning of roll-out of a series of reforms and is in accordance with the vision of Prime Minister, Narendra Modi, to bring about greater EoDB which is now being extended to the capital markets. Review of compliance will encourage participation from domestic and global investors to trade on Indian capital market,” Bhushan said.

“The reform agenda should include providing a level-playing field to Indian capital markets by way of optimising the cost of transactions in line with other global financial markets,” he added.

With regard to outdated compliances, the report said requirement of uploading peak funding details to exchanges and reporting of order limits in the capital market segment should be done away with.

In respect of compliance duplication, the report said registration under Central Know Your Customer (CKYC) and KYC Registration Agency (KRA) should not be allowed to run simultaneously, and one of them should be discontinued. It further said that instead of uploading same documents with multiple  exchanges, a common filing with the clearing corporation that clears the trades of brokers across multiple exchanges should be allowed.

According to the report, certain conflicting compliances including linking of Aadhaar and mobile numbers of individual clients needs to addressed.

“It is not mandatory for an investor to link his Aadhaar with his mobile number. In such cases, the investor cannot avail e-KYC and it becomes necessary to do an in-person verification. Therefore, e-KYC facility needs to be provided in such cases as well,” the report noted. PTI

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