SEBI (Securities Exchange Board of India) has been empowered to deal with key market intermediaries such as clearing corporations along with newer entities in the sector such as research analysts and investment advisers as per the changes proposed in the Finance Bill, 2018. Named as Securities Contracts (Regulation) Act 2018, the legislation allows the capital markets regulator to impose fines up to Rs 25 crore or thrice the amount of profit made on the account of non-compliance of rules. The least amount of fine has been fixed at Rs 5 crore. This legislation marks a stark difference from the earlier policies where SEBI was empowered just to warn for non-compliance to erring parties.Additionally, the permanent Board members of SEBI have also been given powers to oversee such non-conforming parties. The new bill also states that for the period of non-compliance the market participants will have to pay a hefty fine of Rs 1 lakh one day.
The move was welcomed by ex-SEBI Officials who stated that in the light of exposure of Indian Capital Markets to newer varieties of hybrid funds like ATF, REIT’S etc. it was important to have a legal deterrent for the process. The twins fold penalty powers with the presence of adjudicating officer for each case is expected to increase the overall quality of disclosure instead of a routine check approach.
SEBI was merged with Forward Markets Commission in 2015-16 in the light of National spot Exchange Scam.