[This post is contributed by Prachi Pandya, founding proprietress of Corporate Attorneys and Vanessa Fernandes, an intern at Corporate Attorneys] Despite being termed as a weapon of mass destruction by Warren Buffet, derivatives are still an integral part of stock market trading. Whilst purchasing equity, one has to pay the entire value of the shares purchased within the settlement period of two...
A Rule of Reason for Self-Trades?
[The following guest post is contributed by Nikunj Agarwal, a 4th year student at RML National Law University, Lucknow and Arjun Agarwal, a 3rd year student at WB National University of Juridical Sciences, Kolkata. The authors can be contacted at [email protected]] Prefatory It is one of the well-known principles of securities regulation that the primary objective of such regulation is to...
SAT Order on “Flash Crash”
A few days ago, the Securities Appellate Tribunal (SAT) passed its order on an appeal by Emkay Global Financial Services Limited against the National Stock Exchange (NSE) and several investors in a case involving a “flash crash”. This case raises interesting legal and contractual issues, although they were substantially resolved through an interpretation of the bye laws and various circulars...
Madras High Court on SEBI Circular for Scheme of Arrangement
A few months ago, I had discussed SEBI’s circular of February 4, 2013, which imposes more stringent oversight by SEBI and the stock exchanges on different types of schemes of arrangement. Shortly thereafter, our guest contributor Yogesh Chande has pointed to issues relating to the scope of the SEBI circular, and specifically whether the circular applies only to such schemes that require exemption...
Scheme of Arrangement – Revised requirements for the stock exchanges and listed companies
[Yesterday, we had the opportunity to provide a brief analysis here on SEBI’s new circular on the topic. In the following post, Yogesh Chande points to some ambiguities regarding the scope of SEBI’s new circular. Yogesh is a Consultant, Economic Laws Practice, Advocates & Solicitors. Views expressed by the author are personal] This post pertains to the circular issued by Securities and...
Stringent Procedures for Schemes of Arrangement Involving Listed Companies
For the last few years, there has been a perceptible concern on the part of the Securities and Exchange Board of India (SEBI) that companies have been utilizing the facility of schemes of arrangement available under Sections 391-394 of the Companies Act, 1956 to effect various types of transactions, some of which may not be in the interest of minority shareholders. SEBI has sought to introduce...
Regulatory Updates: SEBI and CCI
SEBI: Stock Exchanges and Clearing Corporations SEBI has issued the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 that deal with the recognition, ownership and governance of stock exchanges and clearing corporations. Certain minimum ownership and net worth requirements have been specified. Maximum shareholding by a single shareholder has been...
Impact of SEBI Order on Governance of Exchanges
The concept of demutualization of stock exchanges has given rise to some questions regarding the governance of demutualized exchanges. That concept requires exchanges to separate ownership and governance from that of its trading members. Some issues pertaining to demutualization have come up before SEBI in its investigation into the affairs of the United Stock Exchange of India Limited (USE)...
SEBI Regulates Algorithmic Trading
In order to keep up with advances in technology involving securities trading, SEBI has issued to the stock exchanges broad guidelines on algorithmic trading in the securities markets. The concept of algorithmic trading is defined as any “order that is generated using automated execution logic”. Such trading is effected by automated electronic platforms that analyze split-second information and...
Bombay HC in the MCX Case: Partial Reprieve to “Options” in Securities
Apart from dealing with specific issues relating to the facts of MCX’s application to commence the business of a stock exchange, the Bombay High Court’s judgment introduces greater clarity regarding the enforceability of options in securities of Indian public unlisted companies. The court was concerned with two issues pertaining to buyback and option arrangements that were entered into between...
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