The Securities and Exchange Board of India (SEBI) has issued a new circular aimed at enhancing transparency and investor trust within the Indian stock market. Effective from June 1, 2024, SEBI’s circular mandates top listed entities to adopt industry standards for verifying market rumours, in accordance with Regulation 30(11) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations). This initiative, involving prominent industry associations and stock exchanges, seeks to establish a structured approach to managing market rumours.
Detailed Analysis
Background and Objectives
Market rumours can significantly impact stock prices and investor sentiment, often leading to volatility and misinformation. SEBI’s move to regulate the verification of such rumours is a proactive step towards maintaining market integrity. The circular outlines the establishment of the Industry Standards Forum (ISF), comprising representatives from ASSOCHAM, CII, and FICCI, under the guidance of stock exchanges. The ISF has developed comprehensive industry standards to ensure effective compliance with the regulatory requirements.
Key Provisions of the Circular
1. Formation of Industry Standards Forum (ISF): The ISF, a collaborative initiative between major industry associations and stock exchanges, has been tasked with formulating standards for verifying market rumours. These standards are designed to streamline the process and ensure consistent implementation across listed entities.
2. Mandatory Compliance for Listed Entities: The circular mandates that the top 100 listed entities comply with these industry standards starting June 1, 2024. This requirement will extend to the next top 150 listed entities by December 1, 2024, ensuring a broad adoption of these practices.
3. Role of Stock Exchanges: Stock exchanges are instructed to disseminate the contents of this circular to their listed entities and ensure adherence to the new guidelines. This collaboration between regulatory bodies and exchanges aims to foster a culture of transparency and accountability.
Implementation and Impact
The phased implementation of these standards provides listed entities with a clear timeline to adapt to the new requirements. By December 2024, a significant portion of the market will be covered under these guidelines, potentially leading to a more stable and trustworthy market environment. The inclusion of industry associations in the formulation of these standards underscores the importance of stakeholder collaboration in regulatory processes.
Securities and Exchange Board of India
Circular No. SEBI/HO/CFD/CFD-PoD-2/P/CIR/2024/52 Dated: May 21, 2024
To,
All listed entities
All the recognized Stock Exchanges
The Associated Chambers of Commerce and Industry of India (ASSOCHAM)
Federation of Indian Chambers of Commerce and Industry (FICCI)
Confederation of Indian Industry (CII)
Dear Sir/Madam,
Sub: Industry Standards on verification of market rumours
1. In order to facilitate ease of doing business, the Industry Standards Forum (“ISF”) comprising of representatives from three industry associations, viz. ASSOCHAM, CII and FICCI, under the aegis of the Stock Exchanges, on a pilot basis, has formulated industry standards, in consultation with SEBI, for effective implementation of the requirement to verify market rumours under Regulation 30(11) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”). The industry associations which are part of ISF (ASSOCHAM, FICCI, and CII) and the stock exchanges shall publish the industry standards note on their websites.
2. The listed entities shall follow the aforesaid industry standards to ensure compliance with Regulation 30(11) of LODR Regulations.
3. The requirement to verify market rumours under Regulation 30(11) of LODR Regulations shall be applicable to top 100 listed entities with effect from June 01, 2024 and to top 250 listed entities (i.e., next top 150) with effect from December 01, 2024 as specified by SEBI circular dated January 25, 2024 (link).
4. The Stock Exchanges are advised to bring the contents of this circular to the notice of their listed entities and ensure its compliance.
This circular is issued in exercise of the powers conferred under Section 11(1) and 11A of the Securities and Exchange Board of India Act, 1992 read with regulation 101 of LODR Regulations.
6. This circular is available on SEBI website at www.sebi.gov.in under the category: ‘Legal → Circulars’.
Yours faithfully,
Raj Kumar Das
Deputy General Manager
Corporation Finance Department
Tel. No.: +91 22 2644 9253
Email id: rajkd@sebi.gov.in
