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Framework to prevent fraud by stock brokers

Facts for Prelims

Source: TH


Context: SEBI, the markets regulator in India, has approved several proposals for boosting the corporate governance ecosystem and preventing fraud and market abuse by stockbrokers

Measures IntroducedDescriptionSignificance
Ending permanent directorshipSEBI has ended the practice of individuals holding permanent directorship on boards of listed companies.This move aims to boost corporate governance and encourage the appointment of independent directors who can provide an objective view.
Framework to prevent fraudSEBI has put in place a formal mechanism to prevent fraud and market abuse by stockbrokers.This step is expected to safeguard investors’ money from misuse by stockbrokers.
Private equity funds as sponsors of mutual fundsSEBI has approved a regulatory framework to allow private equity funds to become sponsors of mutual funds.This move is expected to deepen the mutual fund industry in India.
ESG disclosuresSEBI has given its nod to norms for Environmental, Social, and Governance (ESG) disclosures by listed companies.This step is expected to enhance transparency and encourage responsible corporate behaviour.
Fund-blocking facilitySEBI will introduce a fund-blocking facility for secondary market transactions, similar to the one used for Initial Public Offerings (IPOs).This measure is aimed at safeguarding investors’ money from misuse by stockbrokers.