The objective of these regulations was to lay down a regulatory framework for merchant bankers, their eligibility, responsibility and continuance in the securities market.
Merchant bankers play a key role in the primary market and have been entrusted with the responsibility to ensure appropriate due diligence, maintain integrity of the primary market and ensure compliance with the relevant laws on own account and on behalf of the issuers.
As a result of evolution of the securities markets and overall increased compliance requirements, the roles and responsibilities and business undertaken by the bankers in the primary market has increased significantly.
Under the proposed new changes in a consultation paper, Sebi seeks to review of activities of bankers, make changes to capital adequacy requirements.The regulator has also proposed a introduction of minimum liquid net worth apart from reviewing legal structures to be permitted for grant of registrationAmong the proposed changes, Sebi said directors, key personnel, compliance officers and their relatives cannot hold securities in the issuer company.The regulator said existing MB Regulations need to be aligned with amendment in other Sebi Regulations and with the current ecosystem and henceforth the review.
Sebi also wanted clarity on the activities to be permitted to the bankers and ensure continuance of only serious players in the securities market.
The regulator is further proposing to delete provisions which have become reductant and have outlived their utility.
