Utilisation period for government debt limits shortened; unutilised entitlements returned and auctioned monthly to improve market availability.
FIIs and QFIs may utilise government debt limits allocated through the monthly auction up to the 17th day of the succeeding month; any limits unutilised on the 18th will be returned to the free pool and auctioned on the 20th. This change, partially modifying the earlier utilisation period, applies to the auction held on July 22, 2013, and is effective immediately under Section 11(1) of the SEBI Act.

Dematerialisation requirement enables shifting securities from trade-for-trade to normal rolling settlement subject to certification and reporting.
Stock exchanges may move securities of companies that have established connectivity with both depositories from Trade for Trade Settlement to Normal Rolling Settlement if a majority of other-than-promoter holdings are in dematerialised form certified by the RTA or, where no RTA exists, by a practicing company secretary or chartered accountant, and if there are no other grounds for continuation of Trade for Trade Settlement; exchanges must report actions in their periodic development reports to the regulator.

Alternative Investment Funds face monthly reporting, liquidity controls, and a 2x NAV leverage cap for leveraged Category III funds.
Category III AIFs employing leverage must maintain independent risk and compliance functions, disclose conflicts, and comply with reporting: monthly reports in prescribed formats for leveraged Category III AIFs and quarterly for other AIFs. Managers of open-ended Category III AIFs must implement liquidity management policies, disclose and limit suspension of redemptions to exceptional circumstances, and communicate actions to investors and the regulator. Leverage is measured as total exposure over NAV, exposure calculation rules are specified, and leverage shall not exceed 2 times the NAV; daily monitoring, custodian reporting, breach notifications, and remediation timelines are mandated.

FII investments in Security Receipts now count against corporate debt limits, subject to central bank conditions.
FII and QFI investments in Security Receipts issued by Asset Reconstruction Companies shall be reckoned against the extant Corporate Debt Limits and are subject to terms and conditions specified by the central banking authority; custodians must notify their FII clients and the measure takes effect immediately.

Position limits for exchange-traded currency derivatives tightened, margins significantly increased and member client caps imposed immediately.
Revisions impose tighter controls on exchange traded USD INR currency derivatives: initial and extreme loss margins to be increased by 100% of prevailing rates for USD INR contracts; client gross open position capped at 6% of total open interest or 10 million USD, whichever is lower; non bank trading member gross open position capped at 15% of total open interest or 50 million USD, whichever is lower; stock exchanges directed to amend rules, implement systems, disseminate provisions and effect the measures from the specified implementation date.

Arbitration facility expansion requires stock exchanges to establish investor service centres, improving local investor access to arbitration.
Stock exchanges with nation-wide terminals must establish investor service centres providing an arbitration facility (including appellate arbitration) at designated locations, with specified deadlines for initial and subsequent centres. Exchanges must amend bye-laws, notify members, publish the provisions on their websites, and report implementation in monthly development reports; regulatory inspections will verify compliance. The directive is effective immediately under the regulator's statutory powers to protect investors and regulate the securities market.

Place of arbitration: venue tied to client's KYC address, with nationwide exchanges providing specified arbitration centres.
Arbitration venue rules require exchanges with nationwide terminals to provide arbitration and appellate arbitration at specified centres and to conduct proceedings at the centre nearest the Client's KYC address; other exchanges must provide arbitration at their location. Challenges to appellate panel decisions under the Arbitration and Conciliation Act must be filed in the competent court nearest the Client's KYC address. Exchanges must amend bye-laws, notify members, report implementation to SEBI, and are subject to SEBI inspection.

Foreign investment limits in government debt expanded, with targeted allocation to specified institutional investors and temporary special window.
The circular allocates an incremental government debt investment limit exclusively to registered Sovereign Wealth Funds, Multilateral Agencies, Endowment Funds, Insurance Funds, Pension Funds and Foreign Central Banks, making the amount and identified unutilized capacity available for immediate on tap investment; unutilized sums will be auctioned monthly. A temporary special window allows other FIIs that have exhausted reinvestment limits one time capped access until the next auction, subject to an aggregate cap distinct from the earmarked allocation; such investments carry a mandatory short term lock in and are not eligible for reinvestment.

Dematerialization requirement: companies with dual depository connectivity may shift from trade-for-trade to rolling settlement subject to conditions.
Companies with connectivity to both depositories may be shifted from Trade-for-Trade Settlement to normal Rolling Settlement if at least 50% of non-promoter holdings are dematerialized, evidenced by a certificate from the Registrar and Transfer Agent or, if no RTA exists, from a practicing Company Secretary or Chartered Accountant, and provided there are no other grounds for continuation of TFTS; stock exchanges must report actions in their Monthly/Quarterly Development Reports.

Restatement disclosure: publish revised pro forma financial results immediately to shareholders; accounting effects may be recorded as prior period items.
Companies must submit Form A or Form B with annual reports; qualified audit reports are subject to review by a Qualified Audit Review Committee which may require restatement. Restatement requires immediate disclosure of revised pro forma financial results to shareholders via stock exchanges, while the accounting effects may be carried into the subsequent financial year's annual accounts as a prior period item to address tax impacts.

Securities lending eligibility expanded to include Group I securities meeting liquidity and position-limit criteria, with standardised collateral.
Revision of the Securities Lending and Borrowing framework extends eligibility to Group I securities that meet specified liquidity and position-limit thresholds, requires stock exchanges to perform a half-yearly review and prevent new SLB transactions in scrips that fall below eligibility while allowing existing contracts to expire, and mandates that margin collateral for SLB follow the same acceptable forms as in the cash market, with implementation and dissemination duties imposed on exchanges, clearing corporations and depositories.

Offer For Sale announcement requirement: sellers must disclose intention at least one day before the OFS, ensuring market transparency.
Promoters or sellers proposing an Offer For Sale must announce their intention at least on the day prior to the OFS, providing the prescribed information; all other OFS conditions in the earlier SEBI circulars remain in force. Stock exchanges are directed to inform brokers and publish the amendment. The circular is issued under Section 11(1) to protect investors and regulate the securities market.

Algorithmic trading audits required semiannualy, with doubled per-order penalties and enhanced surveillance to curb manipulation and repeat offenders.
Algorithmic trading systems must undergo a system audit every six months by specified certified auditors; identified deficiencies must be reported to exchanges and remediated immediately, failing which exchanges shall block software use and may impose penalties. Exchanges must enhance surveillance of algorithm-generated orders and double per-order penalty charges, and impose additional suspension of proprietary trading for repeat high order-to-trade ratio offenders. Exchanges must amend rules, implement systems, and notify members.

Scheme of Arrangement clarifications: valuation reports exempted where no change in shareholding; public shareholder voting required in promoter-related schemes.
Clarification requires listed companies undertaking Schemes of Arrangement to submit valuation reports unless there is no change in shareholding pattern, defines change in the shareholding pattern to include alteration in proportion of existing shareholders, allotment to new shareholders, or exit of existing shareholders, and prescribes that companies listed on nationwide exchanges must designate such exchanges for coordination while regional-only companies seeking exemption must obtain in-principle nationwide listing approval; specified promoter-related schemes require public shareholder voting by postal ballot and e-voting and non-applicability must be supported by a board approved, auditor certified undertaking published on websites.

Compliance requirement for employee benefit schemes: align with SEBI guidelines and restrict secondary market acquisitions, with disclosure duties.
All employee benefit schemes involving a company's securities must comply with SEBI (ESOS and ESPS) Guidelines, 1999 and the Equity Listing Agreement; schemes set up, managed, controlled or financed by the company fall within scope. Acquisition of company securities from the secondary market for ESOS/ESPS is prohibited. The compliance deadline for aligning existing schemes has been extended; trusts that acquired securities from the secondary market before the amendment may continue to hold them only if schemes are aligned and securities are used in accordance with those aligned schemes. Listed companies must make specified disclosures to stock exchanges in prescribed formats.

Dematerialisation requirement enables shift from Trade-for-Trade to Normal Rolling Settlement subject to certification and absence of other grounds.
Companies with connectivity to both depositories may be shifted from Trade-for-Trade to Normal Rolling Settlement only if at least 50% of non-promoter holdings are in dematerialised mode, evidenced by a certificate from the Registrar and Transfer Agent or, where no RTA exists, from a practicing Company Secretary or Chartered Accountant, and provided there are no other grounds for continuation in Trade-for-Trade. Stock exchanges must report actions taken in Monthly/Quarterly Development Reports.

Infrastructure Debt Fund private placements require a filed Placement Memorandum, investor caps, securitisation for bank loans, and disclosure rules.
SEBI allows IDFs to be launched by private placement to fewer than 50 investors provided a prescribed Placement Memorandum is filed and published; the Placement Memorandum must include scheme features, risk factors, minimum five investors, a 50% single investor cap at allotment with refund/rejection rules for breaches, asset allocation limits (90-100% debt/securitised infrastructure debt, up to 10% equity/convertibles), requirement that bank loans be acquired only via securitisation, due diligence certification by AMC/trustees, specified fee and expense limits, periodic disclosures and unitholder exit protections for changes to fundamental attributes.

Investor grievance redressal via SCORES requires listed companies to register and report or face statutory consequences.
Listed companies must redress investor grievances through the SEBI Complaints Redress System (SCORES), obtain SCORES user ID and password by submitting prescribed details, and file Action Taken Reports within the prescribed period; failure to obtain credentials or to file Action Taken Reports will be treated as non-redressal or may attract statutory penalties. Stock exchanges must notify listed companies and publicize the obligations; an authentication annexure sets out contact and processing details.

Master Circular consolidation of cash market circulars provides single-source compliance guidance and supersedes prior master circular.
Issuance of a Master Circular consolidating all circulars and communications for the stock exchange cash market issued up to the end of March, 2013, effective on issue and expressly superseding the prior master circular; organized into annexures covering Trading Part I, Trading Part II, Settlement, Comprehensive Risk Management, and connectivity with both depositories including eligibility for shifting from Trade-for-Trade to Rolling Settlement.

Depositories Master Circular consolidates SEBI rules up to March 31, 2013, setting KYC, ISIN, BSDA, settlement and disclosure obligations.
This Master Circular compiles SEBI circulars up to March 31, 2013, supersedes the April 13, 2012 master circular and prescribes consolidated operational rules for depositories and DPs, including PAN and KYC requirements, BSDA eligibility and charges, ISIN activation and temporary freezing of additional issues, DIS and transfer safeguards, timelines for T+2 settlement and clearing member pool account transfers, disclosure of investor complaints and arbitration details on depository websites, and obligations on electronic payment data and preservation of records.