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M Damodaran, Chairman, Sebi, while addressing the new policy on P-notes said that this is not a board meeting to decide on a single issue. He said the stock exchanges would be mandated to onstitute a committee chaired by a non-executive member of a concerned exchange to focus on surveillance. This, he feels, would make the market a safer place for investors.He was speaking to mediapersons after the Sebi board meet today. The meet also saw new policy announcements like clearing of Sebi’s proposal to have an SME exchange.
The regulator also expects significant increase in trading volumes on the corporate bond platform. The board has also decided that FIIs and sub-accounts shall not issue P-Notes as underlying as derivatives. 

“All current position to be wound up within 18 months. Further issue of PNs by sub-accounts will be discontinued with immediate effect,” Damodaran said.

Highlights of M Damodaran’s announcements at the Sebi Press Conference:

· Sebi board cleared proposal to have a separate exchange for SME Segment

· Date of calculation of AUC will be Sept 30
· Sub accounts not to be allowed to issue PNs
· PNs can’t be issued with ODIs as underlying
· FIIs shall not issue P-notes as underlying as derivatives has been approved
· Current position to be wound up within 18 months
· Board has decided further issuance of P-notes by sub accounts of FIIs to be discontinued with immediate effect
· Sub accounts issuing P-notes have applied for registration of FIIs: Sebi
· Until a final decision is taken on their being FIIs, sub accounts can continue as normal
· Both proprietary and corporate sub-accounts will be allowed to do business till final decision is announced.
Excerpts from the meeting:

“One of the issues that Sebi focuses on and is expected to focus on is surveillance. As it is customary in all our board meetings to report on surveillance activities, observations, conclusions, action taken and thereon was placed before the board and during discussions the prospect and the formal decision is been taken based thereon that the stock exchanges will be mandated to constitute a committee of board that will focus on surveillance.

This will be a committee chaired by an independent member, a non-executed member of the board of directors of the concerned exchange. We believe that broad level attention through the focused efforts of specially constituted committee of the board will enhance surveillance and ensure that it is consistent with Sebi’s interest and with the intentions and interest of the market place. The market will become a safer place for investors and that is one of the decisions that the board took today.”

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