Photo of Rohan Banerjee

Partner in the Financial Regulatory Practice at the Mumbai office of Cyril Amarchand Mangaldas. Rohan has advised a number of global and domestic financial institutions on a wide range of securities law matters including advising on SEBI insider trading as well as market manipulation regulations, representing clients in regulatory contentious matters, advising on M&A in the financial sector, etc. He can be reached at rohan.banerjee@cyrilshroff.com

FIG Papers No. 6 - Series–2 RBI Payment Regulations – 2009 to 2021 - Bank ‘nodals’ to PA PG licenses Blog

Introduction:

In our previous FIG Paper, we shared key learnings from our experience in connection with the payment aggregator and payment gateway guidelines (“PA/PG Guidelines”) issued by the Reserve Bank of India (“RBI”) on March 17, 2020. Based on representations received from various industry associations and payment intermediaries, the RBI has formalised the clarifications (initially issued on September 17, 2020) relating to the PA/PG Guidelines on March 31, 2021 (“Clarifications”).
Continue Reading FIG Papers (No. 6: Series–2) RBI Payment Regulations – 2009 to 2021: Bank ‘nodals’ to PA/PG licenses!

RBI Payment Regulations - 2009 to 2021 - Bank nodals to PA PG licenses

Introduction:

In early March 2020, a regulatory moratorium imposed on a private bank in India froze the country’s digital payments ecosystem. Many payment aggregators (“PA”) and payment gateways (“PG”) had set up nodal accounts with this bank, including others, and it raised a question on whether the customer funds pooled in those accounts were bankruptcy ‘remote’. Within 10 days, the Reserve Bank of India (“RBI”) issued the payment aggregator and gateway guidelines (“PA/PG Guidelines”) on March 17, 2020, under the Payment and Settlement Systems Act, 2007 (“PSSA”), to regulate PAs and prescribe baseline technology standards for PAs and PGs.
Continue Reading FIG Papers (No. 5 : Series -1) : RBI Payment Regulations – 2009 to 2021: Bank ‘nodals’ to PA/PG licenses! 

RBI’S REVISED REGULATORY FRAMEWORK FOR NBFCS

Introduction

In the backdrop of recent stress in the financial sector, especially in the speciality finance (i.e. NBFC) space, the Reserve Bank of India (“RBI”) has sought to address potential systemic risks by issuing a discussion paper on ‘Revised Regulatory Framework for NBFCs – A Scale-Based Approach’ (“Discussion Paper”) on January 22, 2021. The apex bank, through the Discussion Paper, has introduced a scale-based approach to the regulation of non-banking financial companies. Owing to their growing significance, linkages with the banking and capital markets sectors, and complexity in operations, the Discussion Paper proposes a four-tiered regulatory structure for NBFCs, based on proportionality of the NBFCs.
Continue Reading FIG Papers (No. 2) : RBI’s Revised Regulatory Framework for NBFCs : Industry Implications

PRIOR INTIMATION REQUIREMENT UNDER THE LISTING REGULATIONS - A CRITIQUE 

Introduction

Norms concerning corporate governance in India have evolved over a period of time. Since markets and businesses are inherently dynamic, they continue to evolve globally. The Securities and Exchange Board of India (“SEBI”), to its credit, has been on the ball and contributed significantly towards raising the standards of corporate governance for listed entities in India. The proof of the pudding, however, is in the eating and to this end, this piece examines the relevance of the extant requirement of prior intimation prescribed for listed entities in the current market.

Regulations 29 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (“Listing Regulations”), requires a listed entity to intimate the stock exchanges beforehand if its board of directors (“Board”) have a meeting scheduled to consider certain specified proposals, including financial results, buy-back of securities, voluntary delisting and fund raising (intimation is also required for general meeting or postal ballot for this proposal indicating the type of issuance).
Continue Reading Prior Intimation Requirement under the Listing Regulations – A Critique

WHAT IS FRONT RUNNING – A Q&A PIECE IN LIGHT OF THE SEBI ORDER AGAINST DEALERS OF RELIANCE SECURITIES LTD

Introduction

In an interim ex-parte order last month against the dealers of Reliance Securities Limited (“RSL”) and other related entities (“RSL Order”)[1], SEBI prima facie held over two dozen entities to have engaged in front running the trades of Tata Absolute Return Fund, a scheme of Tata AIF (“Big Client”).

During its preliminary examination, SEBI meticulously pieced together several bits of available circumstantial evidence and alleged an archetypal scheme of front running purportedly employed by three senior dealers (“Dealers”) at RSL, in nexus with various related entities. The RSL Order alleges that once the Dealers at RSL were privy to the non-public information of the impending orders of Big Client, they along with their connected broker or dealer entity would, through multiple trading accounts directly or indirectly controlled by them, place trades either in the Buy-Buy-Sell pattern or Sell-Sell-Buy pattern, around the time of the orders of the Big Client to generate substantial proceeds.
Continue Reading What is Front Running? – A Q&A Piece in Light of the SEBI Order Against Dealers of Reliance Securities Ltd.

Revised Framework for Core Investment Companies – Tightening the Screws

Introduction

The Reserve Bank of India (“RBI”) has modified the regulatory landscape applicable to core investment companies (“CICs”), as per its circular dated August 13, 2020 (“Revised Framework”), in order to ensure stability of the financial system and address systemic risks posed by inter-connectedness of CICs and their group companies. In contrast to the light-touch regulation issued exactly a decade ago on August 12, 2010, the Revised Framework imposes far more stricter norms.

In furtherance to its announcement in the Statement on Development and Regulatory Policies issued on June 6, 2019, along with the Second Bi-Monthly Monetary Policy for the year 2019-20, the RBI constituted a working group under the chairmanship of Mr. Tapan Ray (non-executive chairman, Central Bank of India and former secretary, Ministry of Corporate Affairs) (“Working Group”) to review the regulatory and supervisory framework applicable to CICs. The Working Group issued its report in November 2019 and the Revised Framework has now been issued based on the recommendations of the Working Group.
Continue Reading Revised Framework for Core Investment Companies – Tightening the Screws?

Recent amendments to the insider trading regime

Since overhauling the insider trading regime with the introduction of the SEBI (Prohibition of Insider Trading) Regulations, 2015 (“PIT Regulations”), the Securities and Exchange Board of India (“SEBI”) has continually sought to fine tune and tweak the regulations through amendments in 2018 and 2019. On July 17, 2020, SEBI notified the Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2020 (“PIT Amendment”), to introduce further changes to the PIT Regulations.
Continue Reading Recent Amendments to the Insider Trading Regime

The most valuable commodity I know of is information.

– Gordon Gekko, Wall Street

Over the past few weeks, the Securities and Exchange Board of India (SEBI) has passed three orders[1] (SEBI Orders) in the infamous ‘WhatsApp leak’ saga that has been in the news since November 2017[2]. Holding the impugned perpetrators guilty of violating insider trading regulations, the regulator has taken significant steps in pushing the boundaries of the concepts of insider, UPSI and insider trading.


Continue Reading SEBI and WhatsApp leaks: Every link in the chain matters

Mutual Funds and Alternative Investments - Stewardship Code

Introduction

On December 24, 2019, Securities and Exchange Board of India (“SEBI”) released a circular setting up a stewardship code for Asset Management Companies (“AMCs”), Mutual Funds (“MFs”) and all the categories of Alternative Investment Funds (“AIFs”) investing in listed Indian companies (“Stewardship Code” or “Code”). In keeping with global trends, SEBI has made it necessary for the power wielding cash-rich institutional investors, to act in accordance with the responsibilities that invariably accompany and behoove such powers and formulate a policy adopting the principles enshrined in the Code.

The Stewardship Code prescribes certain principles which, aim at enhancing the responsibilities of the AMCs/ AIFs to protect the interests of their investors/beneficiaries. The requirements pertaining to the Stewardship Code shall come into effect on April 1, 2020.
Continue Reading Being Responsible Corporate Citizens – How Mutual Funds and Alternative Investment Funds will Rise Up to the Stewardship code

Insider Trading Hotline SEBI - Informant Mechanism

In our previous blog post, dated June 12, 2019, we discussed the Securities Exchange Board of India’s (SEBI) efforts to institutionalise an informant mechanism for insider trading, through its discussion paper released in June 2019 (Discussion Paper).

The regulator has now formalised this into law through a recent amendment to the Insider Trading Regulations, which came after a SEBI board meeting approved the informant mechanism scheme on August 21 of last month. Interestingly, while the publicly available agenda of the SEBI board meeting states that it had received comments from certain entities on the Discussion Paper, these comments are not publicly available and are stated to have been excised for reasons of confidentiality.
Continue Reading SEBI launches a new hotline: Introduction of the Informant Mechanism into the Insider Trading Regulations