Context:
The Securities and Exchange Board of India (SEBI) has proposed allowing stock brokers to operate in the International Financial Services Centre (IFSC) at GIFT City without requiring prior SEBI approval. Brokers can operate through a Separate Business Unit (SBU) of the stock broking entity.
Separate Business Unit (SBU)
A Separate Business Unit (SBU), also known as a Strategic Business Unit, is a self-contained part of a larger company that operates independently, with its own vision, mission, objectives, and strategies, while still reporting to the parent organization.
Operational Guidelines for SBUs
- The SBU must:
- Conduct only securities market-related activities in GIFT-IFSC.
- Be ring-fenced and maintain an arms-length relationship from Indian securities market operations of the parent broker.
- Maintain separate accounts and net worth, isolated from the parent Indian entity.
Regulatory Oversight
- All policies, eligibility, risk management, grievance handling, inspection, enforcement, and claims related to the SBU will fall under the respective regulatory authority for GIFT-IFSC.
- Investors availing services from SBUs will not have access to SEBI’s SCORES platform, nor the grievance redressal mechanisms or investor protection funds of Indian stock exchanges.
Transition for Existing Subsidiaries
- Brokers who previously set up subsidiaries or joint ventures for securities market activities in GIFT-IFSC may now dismantle these structures and conduct activities directly under an SBU.
SEBI Cracks Down on Misleading Social Media Posts
- Since October 2023, SEBI has taken down over 70,000 misleading social media posts and accounts with help from social media platforms.
- SEBI’s whole-time member, Ananth Narayan, highlighted the growing threat of unregistered investment advisers and fraudulent research analysts.
- SEBI plans to introduce a ‘UPI Payright’ handle to help investors clearly identify SEBI-registered entities.
- Narayan emphasized the need for self-regulation and more certified investment advisors to better protect investors from online scams.
Source: TET
