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BOMBAY STOCK EXCHANGE BROKERS' FORUM (BBF) | MUMBAI, INDIA FEBRUARY 2019 | VOLUME: 7 • ISSUE NO. 11 • `15/-
R.N.I. No. MAHENG/2012/47145
Postal Registration No. MCS/153/2019-21 • MR/Tech/WPP-355/South/2019
Published on 1st (Day) of every month • Posted at Patrika Channel Sorting Office, Mumbai - 400001 • Posting date: 3rd & 4th of every month
FORUM VIEWS
wins SILVER AWARD FOR BEST INTERNAL MAGAZINE 2018 &
SILVER AWARD FOR BEST FEATURES (IN ENGLISH) MAGAZINE 2018
at 58TH ANNUAL AWARDS NITE OF
THE ASSOCIATION OF BUSINESS COMMUNICATORS OF INDIA (ABCI)
BSE BULL RUN 2019
52
(IN ASSOCIATION WITH ZEE BUSINESS)
BOMBAY STOCK EXCHANGE BROKERS’
GOVERNING BOARD 201
FORUM (BBF) GOVERNING BOARD 2018 - 19
EXECUTIVE COMMITTEE
Uttam Bagri Anurag Bansal Purav Fozdar Harin Mehta Kamlesh D Shroff Lalit Mundra
Chairman Vice-Chairman Secretary Jt. Secretary Treasurer Jt. Treasurer
GOVERNING BOARD MEMBERS
Anjana Anup Arpit Ashok Hemant Hemant
Vijay Shah Gupta Agarwal Ajmera Desai Majethia
Jay Jitendra Kumar Ketan Kishor Kushal Madhavi
Toshniwal Panda Marwadi Kansagra A. Shah Vora
Mahavir Mehul Naresh Nirav
Lunawat Patel Rana Gandhi
BOMBAY STOCK EXCHANGE
Nithin Parth Rajiv Virender BROKERS' FORUM (BBF)
Kamath Nyati Choksey Mansukhani OFFICIAL MASCOT
2 3 FORUM VIEWS - FEBRUARY 2019
FEBRUARY 2019
FEBRUARY 2019 CONTE
CONTENTS ceo & coo message
05 CEO & COO DESK 34 INSIGHTS AND EMERGING
TRENDS IN INDIA 2019
movement of the index very erratic. This shows that the
quality of data has to be checked as the industrial activity
06 BSE BULL RUN IN ASSOCIATION
WITH ZEE BUSINESS 35 FINANCIAL ACUMEN
THROUGH “SPIRITUALITY”
Dr. Vispi Rusi
cannot show such high degree of variation. The Farm loan
waiver after the recent elections would contribute to the
rise in the fiscal deficit.
Bhathena, The GST councils which met on
08 BULLS & BEARS: MAINTENANCE
36 ANALYSIS OF THE FUGITIVE PhD (h.c.) the 10th of the month came out
Welcome
OF RECORDS BY INTERMEDIARIES ECONOMIC OFFENDERS ACT, 2018
with the increased exemption
limit from Rs. 20 lakhs to Rs. 40
lakhs and also increased the
12 THE WORLD ECONOMY,
SUSTAINABILITY AND
INSTITUTIONAL REFORM 38 MODULE OF SERVICE EXPORTS
REPORTING FORM (SERF)
composition limit to Rs. 1.5
crores. This would make the
ease of doing business for the
to Forum Views magazine. Small and Medium Scale
industries which were under the
WORLD BANK BACKS INDIA’S GROWTH: The world Dr. Aditya Srinivas increased budget of working
14 SIGNING OFF 2018: INDIA EQUITY
MARKET PERFORMANCE
40 THE PAYMENT OF
GRATUITY ACT, 1972
economy and Indian economy are facing some of the most
interesting times as the macro- economic indicators
globally are giving mixed signals. The Indian Economy
capital and the cost of compliance. The key event to be
watched is the Interim Budget which would come in the
month of February.
GDP is likely to grow at 7.5% in the coming years as per the
16 ENTERPRISE SOFTWARE OPTIONS:
LEGACY VS. CLOUD
latest data of the World Bank. This makes Indian economy
again the fastest growing economy in the world. The world On the BBF Front:
44 SEMINARS & EVENTS CONDUCTED
BY BBF FOR THE PROGRESS OF
is likely to grow at 2.8%. BRICS nations are likely to grow
at 5.3%. The US FED statement that they would not hurry
to raise the interest rates was a very welcome move and
BBF - Representations
18 ASIA-PACIFIC MARKETS
MONTHLY HIGHLIGHTS
AND INSIGHTS
DECEMBER 2018 - JANUARY 2019 this calmed the world markets which showed positive
movement. The Indian stock markets gave return of 5.6%
as compared to US markets which gave 0.01%. The year
Date Topic
5 Dec Proposal to Introduce
Represented
To
Ministry of
46 PHILOSOPHY & SELF MANAGEMENT:
ARE YOU ANGEL OR DEVIL?
2018 saw that the Foreign Institutional Investors were net
sellers to the tune of Rs. 32000 crores while the Mutual
Market Making in
Sovereign Gold Bonds
Finance,
Govt of India
23 COMPLIANCE CALENDAR
FEBRUARY 2019
funds invested Rs. 1,20,000 crores. The flow from SIP was
average Rs. 7000 crores during 2018 which means that
the retail investor has confidence in the growth story of the
(SGBs)
18 Dec Representation on the Central Board
24 REGULATORY
PULSE
47 WELLNESS Q&A:
METABOLISM
Indian markets.
BBF - Forum Views Magazine wins
Frequently Asked
Questions on Banking,
Insurance and Stock
of Excise &
Customs
North Block
Silver Award in two categories - Broking Sector, in (Commissioner
26 CIRCULARS 48 HEALING INSTITUTE: CHEFS OF YOGA:
MALVIKA & PARMITA OF PRANA KITCHEN
Best Internal Magazine & Best
Features (In English) Magazine
relation to the stock
broking sector, dated 25
September 2018
GST Policy
wing)
2018 at 58th Association of
32 PERSON OF THE YEAR 2018
50 FITNESS CLINIC: WEIGHT-WATCHER
TRAVELLER'S TROUBLES SOLVED
Business Communicators of India
(ABCI) Annual Awards Nite 2018.
BBF - Investor Education & Awareness Initiatives
Date
4 Jan
Institutions
PU's Education Institute (Batch 1-2)
The recent Index of Industrial Production came as a rude 8 Jan N.G. Bedekar College of Commerce
shock as it declined from 8.1 % to 0.5% which is very (Batch 1-2)
negative surprise. The trend of the last three readings is 14-15 Jan Guru Nanak College of Arts, Science
BSE Brokers’ Forum Steering Committee Printed, Published and Edited by Dr. VISPI RUSI BHATHENA, PhD (h.c.) also very volatile. The previous three reading were 4.5%
and Commerce
& Dr. V. ADITYA SRINIVAS on behalf of BSE BROKERS' FORUM, then it came to 8.1% and now 0.5%. This makes the
Uttam Bagri (Chairman)
printed at KSHITIJ PRINTERS, 49, Parsi Panchayat Road,
Anurag Bansal (Vice - Chairman)
Ashok Ind. Estate, 1st, Floor, Andheri (East) Mumbai - 400 069. 58TH ASSOCIATION OF BUSINESS COMMUNICATORS OF INDIA (ABCI) ANNUAL AWARDS 2018 (18th January 2019)
Purav Fozdar (Secretary) and published from BSE BROKERS' FORUM, 808 A,
Harin Mehta (Jt. Secretary) P. J. TOWERS, DALAL STREET, FORT, MUMBAI - 400 001.
Kamlesh D Shroff (Treasurer) Editor: Dr. V. ADITYA SRINIVAS
Lalit Mundra (Jt. Treasurer) Design by: Harshad Gajera | Photographer: Sanjeev Dubey
Write to us:
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Disclaimer: This magazine is meant for information purposes only and does not constitute any opinion or guidelines or recommendation on any course of action to be followed by the reader(s). It is not intended to be used
as trading or investment advice by anybody and should not in any way be treated as a recommendation. The information contained in this magazine does not constitute or form part of and should not be construed as, any
offer for purchase or sale of any product or service. While the information in the magazine has been compiled from sources believed to be reliable and in good faith, readers may note that the contents thereof including BBF wins Silver Award for BBF wins Silver Award for
text, graphics, links or other items are provided without warranties of any kind. BSE Brokers' Forum expressly disclaims any warranty as to the accuracy, correctness, reliability, timeliness, merchantability or fitness for
any particular purpose, of this magazine. BSE Brokers' Forum shall also not be liable for any damage or loss of any kind, howsoever caused as a result (direct or indirect) of the use of the information or data contained in this
Best Internal Magazine 2018 Best Features (In English) Magazine 2018
magazine. Any alteration, transmission, photocopied distribution in part or in whole or reproduction of any form of this magazine or any part thereof without prior consent of BSE Brokers' Forum is prohibited.
4 FORUM VIEWS - FEBRUARY 2019 5 FORUM VIEWS - FEBRUARY 2019
BSE BULL RUN IN ASSOCIA TION
SUNDAY,WITH
13 JANUARY,ZEE
2019 BUSINESS
BSE BULL RUN 2019 (IN ASSOCIATION WITH ZEE BUSINESS)
Winners
Ankita Lokhande (Indian Daisy Shah (Indian model,
Suresh Prabhu (Minister of Commerce and Industry) addressing actress) addressing dancer and film actress)
the gathering addressing
Ajay Tyagi
(Chairman, SEBI)
6 FORUM VIEWS - FEBRUARY 2019 7 FORUM VIEWS - FEBRUARY 2019
BULLS
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BEARS
Bears BULLS
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BEARS
Bears
• Margin deposit book (i) In relation to registrar to an issue and share transfer agent
MAINTENANCE OF RECORDS • Client account opening form in the specified format being a body corporate
• a copy of balance sheet and profit and loss account as
BY INTERMEDIARIES Not only do stock brokers need to maintain these records but they
also need to intimate the Board as to where these records are
specified in sections 211 and 212 of the Companies Act,
1956;
kept. In the matter of Gangotri Textiles Limiteddecided on • a copy of the auditor's report referred to in section 227 of
September 20, 2016, the Whole Time Member (WTM) Rajeev the Companies Act, 1956;
By Sumit Agrawal, Regulatory Lawyer Kumar Agarwal had decided that the stock brokers’ failure to • a statement of capital adequacy requirements for each
Ex-Asstt. Legal Advisor, SEBI provide necessary documents, information and details of its quarter.
client pertaining to April/May 2006, during investigation, (ii) In relation to registrar to an issue and share transfer agent not
submitting that they were tool old when they were sought for in being a body corporate
According to the provision Intermediaries includes: Stock-broker, April 2011 was in contravention of Regulation 17 of the SEBI • all sums of money received and expended by them and
Under the SEBI (Stock Brokers) Sub-broker, Share Transfer Agents, bankers to an issue, trustees of (Stock Brokers) Regulations, 1992. Accordingly, the WTM had the matters in respect of which the receipt and
trust deed, registrar to an issue, merchant bankers, underwriters, suspended the registration of the stock broker for a period of six
Regulations, 1992 a stock portfolio managers, investment advisers, Depositories, Depository months.
expenditure take place;
• their assets and liabilities; and
broker means a person having participants, custodian of securities, foreign institutional
investors, credit rating agencies, asset management company, After the SEBI (Stock Brokers and Sub-brokers) (Amendment)
• a statement of capital adequacy requirements for each
quarter.
trading rights in any recognised clearing member, clearing house, foreign portfolio investors, and Regulations, 2018, with effect from the April 01, 2019, stock
such other intermediaries who may be associated with brokers are no longer required to maintain registers of accounts of
stock exchange and it includes securities markets in any manner. sub-brokers as SEBI has done away with the category of sub-
Furthermore, every registrar to an issue has to also maintain the
following records with respect to:
a trading member. brokers as market intermediaries. For information, registered
sub-brokers have to either migrate to act as an authorised person • all the applications received from investors in respect of an
Ambiguity arises with reference to interpretation of “who may be
and/or trading member or surrender their registration within issue;
associated with securities market”. SEBI has taken a wider scope
Intermediaries can be termed as the lifeline of the Securities in case of its jurisdiction whereby there was talk of chartered March 31, 2019. • all applications of investors rejected and reasons therefor;
Market in India. Intermediaries are broadly classified as primary accountants, company secretaries, cost accountants and valuers • basis of allotment of securities to the investors as finalised in
market intermediaries and secondary market intermediaries. being brought under SEBI scanner because of their involvement in Recognised Stock Exchanges& Recognised Clearing consultation with the stock exchange;
These intermediaries play a pivotal role in financial market and a number of high profile cases. However, these ambiguities still Corporations • terms and conditions of purchase of securities;
thus are an integral part of it. They act as vital link between exist but despite of them, an attempt has been made to bring Stock exchanges function as the first level market regulators • allotment of securities;
investor, issuer and regulator. Intermediaries are the first point of clarity with reference to maintenance of records by intermediaries. since they set standards for fair trading practices and regulate the • list of names of allottees and non-allottees of the securities;
contact in the financial market and represent the financial market trading activities and regulate the trading activities of its • refund orders dispatched to investors in respect of application
to small individual investors. Stock Brokers members according to such standards. The Securities Contract monies received from them in response to an issue;
Under the SEBI (Stock Brokers) Regulations, 1992 a stock broker (Regulations) (Stock Exchange & Clearing Corporations) • such other records as may be specified by the Board for
Clauses (b) and (ba) of Section 11 of the SEBI Act, 1992 empower means a person having trading rights in any recognised stock Regulations, 2018 require recognised stock exchanges and carrying on the activities as registrars to an issue.
SEBI to provide for registration and regulation of market exchange and it includes a trading member. Even though the terms recognised clearing corporations to maintain and preserve all the
intermediaries. For the same, SEBI has framed various regulations ‘member’ and ‘broker’ are used interchangeably, registration as a books, registers, other documents and records, as provided Every share transfer agent has to also maintain the following
in exercise of its powers under Section 30. The aforesaid stock broker is different from enrolment as a member with below relating to the issue or transfer of its securities for a period records in respect of a body corporate on whose behalf he is
regulations empower SEBI to inspect their functioning and also to concerned stock exchange. While every registered stock broker is of eight years: carrying on the activities as share transfer agent namely:
impose penalties in case of any default or non-compliance. a member of a stock exchange, all members of a stock exchange • Minute books of the meetings of: • list of holders of securities of such body corporate;
are not registered stock brokers. (i) governing board; • the names of transferor and transferee and the dates of
One of the most cumbersome tasks for these intermediaries is to (ii) any committees of the governing board; transfer of securities;
maintain records of the client for many years. Not only arethe Regulation 18 of these regulations states that every stock broker • Record of clearing members showing their full names, • such other records as may be specified by the Board for
records that each intermediary needs to maintain are wholly has to preserve the books of account and other records for a addresses and details of bank and depository accounts for carrying out the activities as share transfer agents.
different from the other but the period for which the same needs to minimum period of five years. Such other records include the settlement purposes;
be done is different too. following: • Transaction records; Investment Advisers
• Register of transactions/SaudaBook • Record of security deposits; Margin deposits book; Investment Advisers need to maintain the following records
Storing such vast amounts of data is a problem in itself even if we • Clients ledger • Client margin collection details; under Regulation 19 of the SEBI (Investment Advisers)
were to disregard the fact of the havoc that can be wrecked with • General ledger • Ledgers; Regulations, 2013:
any leak of the same data. • Journals • Journals; • Know Your Client records of the client;
• Cash book • Cash book; • Risk profiling and risk assessment of the client;
The term intermediary is defined under Regulation 2 (1) (g) of the • Bank pass book • Bank account statement; • Suitability assessment of the advice being provided;
SEBI (Intermediaries) Regulations, 2008 as: • Documents register containing particulars of securities • Such other books of accounts and documents as may be • Copies of agreements with clients, if any;
received and delivered in physical form and the statement of specified by the Board from time to time. • Investment advice provided, whether written or oral;
“intermediary” means a person mentioned in clauses (b) and (ba) account and other records relating to receipt and delivery of
• Rationale for arriving at investment advice, duly signed and
of sub-section (2) of section 11 and sub-section (1) and (1A) of securities provided by the depository participants in respect of Registrar to an Issue/Share Transfer Agent
dated;
section 12 of the Act and includes an asset management dematerialized securities Although the functions of a registrar to an issue or share transfer
• A register or record containing list of the clients, the date of
company in relation to the Securities and Exchange Board of India • Member’s contract books showing details of all contracts agent can be performed by the concerned company itself but the
entered into by him with other members of the same exchange advice, nature of the advice, the products/securities in which
(Mutual Funds) Regulations, 1996, a clearing member of a diligence and volume of work involved necessitates the
or counterfoils or duplicates of memos of confirmation issued advice was rendered and fee, if any charged for such advice.
clearing corporation or clearing house, foreign portfolio investors appointment of an outside agency. Regulation 14 of the SEBI
and a trading member of a derivative segment or currency to such other members. (Registrars to an Issue and Share Transfer Agents) Regulations,
• Counterfoils or duplicates of contract notes issued to clients 1993 necessitates that registrar to an issue and share transfer Like stock brokers, Investment Advisers too need to maintain all
derivatives segment of a stock exchange but does not include
• Written consent of clients in respect of contracts entered into agent maintain the following books of accounts and documents in records in physical or electronic form and preserved for a
foreign venture capital investor, mutual fund, collective
as principals respect of eight preceding financial years: minimum period of five years.
investment scheme and venture capital fund;
8 FORUM VIEWS - FEBRUARY 2019 9 FORUM VIEWS - FEBRUARY 2019
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Underwriters the issuer of securities, etc. to institutional investors such as • true and fair accounts relating to remittance of initial corpus • records of all the transactions entered into with a depository
The financial agencies that enter into an agreement with the foreign institutional investors, mutual funds, portfolio managers. for buying, selling and realising capital gains of investment and with a beneficial owner;
company to ensure subscription in case of failure of public or made from the corpus; • details of securities dematerialised, rematerialised on behalf
existing shareholders to do so are known as underwriters. Regulation 19 of the SEBI (Custodian of Securities) Regulations, • accounts of remittances to India for investments in India and of beneficial owners with whom it has entered into an
1996 requires custodians to preserve the following records and realising capital gains on investments made from such agreement;
Regulation 16 of the SEBI (Underwriters) Regulations, 1993 documents for a minimum period of five years: remittances; • records of instructions received from beneficial owners and
requires underwriters to keep and maintain the following books of • records containing details of securities, assets or documents • bank statement of accounts; statements of account provided to beneficial owners; and
account and documents: received and released on behalf of each client; • contract notes relating to purchase and sale of securities; and • records of approval, notice, entry and cancellation of pledge or
(i) in relation to underwriter being a body corporate- • records containing details of monies received and released on • communication from and to the designated depository hypothecation, as the case may be.
• a copy of the balance sheet and profit and loss account as behalf of each client; participants, stock brokers and depository participants
specified in sections 211 and 212 of the Companies Act, • records containing details of rights or entitlements of each regarding investments in securities Credit Rating Agency
1956; client arising from the securities held on behalf of the client; Credit Rating Agencies, on the basis of factors like business risk,
• a copy of the auditor’s report referred to in section 227 of • records containing details of registration of securities in Alternative Investment Fund market position, operating efficiency, adequacy of cash flows,
the Companies Act, 1956; respect of each client; Alternative Investment Fund (AIF) is a fund established or financial risk, financial flexibility, management of robustness,
(ii) in relation to an underwriter not being a body corporate- • ledger for each client; incorporated in India which is a privately pooled investment industry environment, etc., rate securities. In other words, credit
• records in respect of all sums of money received and • records containing details of instructions received from and vehicle which collects funds from sophisticated investors, rating agencies provide opinion regarding securities in a
expended by them and the matters in respect of which the sent to clients; and whether Indian or foreign, of investing it in accordance with a standardized manner.
receipt and expenditure take place; and • records of all reports submitted to the Board. defined investment policy for the benefit of its investors.
• their assets and liabilities. SEBI’s master circular for credit rating agencies dated May 02,
Debenture Trustee AIFs are regulated and registered under the SEBI (Alternative 2018 envisages that a credit rating agency should maintain the
Portfolio Manager A debenture trustee is a trustee of a trust deed for securing any Investment Funds) Regulations, 2012. Under Regulation 27 of the following records for five years after the maturity of instruments:
A portfolio manager advises or directs or undertakes on behalf of issue of debentures of a body corporate. Regulation 7 of the SEBI same regulations, the manager or sponsor of the AIF needs to • The important factors underlying the credit rating and
the clientthe management or administration of a portfolio of (Debenture Trustees) Regulations, 1993 states that to act as maintain the following records for a period of five years after the sensitivity of such credit rating to changes in these factors
securities or the funds of the client pursuant to a contract or debenture trustee, the entity should either be a scheduled bank winding up of the fund: • Summary of discussions with the issuer, its management,
arrangement. Portfolio Managers either exercise discretion as to carrying on commercial activity, a public financial institution, an • the assets under the scheme/fund; auditors and bankers which have a bearing on the credit
the investments or management of the portfolio of securities or insurance company or a body corporate. The entity has to be • valuation policies and practices; rating,
funds of the client or not, depending on the arrangement. registered with SEBI to act as a debenture trustee. • investment strategies; • Decisions of the rating committee(s), including voting details
• particulars of investors and their contribution; and notes of dissent, if any, by any member of the rating
Portfolio managers are registered and regulated under the Regulation 17 of the same regulations provide that every • rationale for investments made. committee, and
provisions of the SEBI (Portfolio Managers) Regulations, 1993. debenture trustee has to keep and maintain proper books of • If a quantitative model is a substantial component of the credit
Regulation 19 of the same regulations requires the portfolio account, records and documents, relating to the trusteeship Depositories and Participants rating process, the rationale for any material difference
manager to preserve the following books of account and other functions for a period of not less than five financial years from the Depositories and participants are operationally governed under between the credit rating implied by the model and the credit
records and documents mentioned in Regulation 17: date of redemption of debentures. the Depositories Act, 1996 and SEBI (Depositories and rating actually assigned.
• a copy of balance sheet at the end of each accounting period; Participants) Regulations, 2018. SEBI notified the new regulations
• a copy of the profit and loss account for each accounting Merchant Bankers in October 2018. Conclusion
period; Merchant Bankers render a diverse range of services, like Although SEBI has put in place separate regulations for all
• a copy of the auditor’s report on the accounts for each managing public issue of securities, underwriting connected with Regulation 54 of the same regulations envisages every depository intermediaries but that has not been enough to provide clarity to
accounting period; public issue management business, managing/advising on to maintain the following records and documents for a minimum them. In fact, it has only contributed to confusionin the market. If
• a statement of financial position and; international offerings of debt/equity, etc. Merchant bankers are period of eight years: there was to be a common regulation for all the intermediaries, it
• records in support of every investment transaction or prohibited from undertaking any activities other than those in • records of securities dematerialised and rematerialised; would decrease the burden of intermediaries and will make their
recommendation which will indicate the data, facts and securities market. • the names of the transferor, transferee, and the dates of work less cumbersome.Further, there is no distinction for the
opinion leading to that investment decision. transfer of securities; scale of intermediaries’ operations as intermediaries with huge
Under Regulation 16 of the SEBI (Merchant Bankers) Regulations, • a register and an index of beneficial owners; differences in turnover are treated the same. Threshold limits
Research Analysts 1992 merchant bankers need to preserve, as specified in • details of the holding of the securities of beneficial owners as should be made so as to give leverage to small intermediaries to
Regulation 25 of the SEBI (Research Analysts) Regulations, 2014 Regulation 14, the following books of account and other records at the end of each day; comply with regulations. A balance between the regulations and
require research analysts or research entities to maintain and and documents for a minimum period of five years: • records of instructions received from and sent to participants, compliances needs to be maintained so as to allow intermediaries
preserve the following records in physical or electronic form for a • a copy of balance sheet as at the end of the each accounting issuers, issuers’ agents and beneficial owners; a little more space in their operations because after all, for a major
minimum period of five years: period; • records of approval, notice, entry and cancellation of pledge or chunk of small investors, intermediaries are their channels to the
• Research report duly signed and dated; • a copy of profit and loss account for that period; hypothecation, as the case may be; markets.
• Research recommendation provided; • a copy of the auditor‘s report on the accounts for that period • details of participants;
• Rationale for arriving at research recommendation; • a statement of financial position. • details of securities declared to be eligible for
• Record of public appearance. • Records and documents pertaining to due diligence exercised dematerialisation in the depository;and Sumit Agrawal is Founder, RegStreet Law
in pre-issue and post –issue activities of issue management • such other records as may be specified by the Board for Advisors, a boutique law firm based in Mumbai. The
firm’s focus areas are Capital Markets &
Custodian of Securities and in case of takeover, buyback and delisting of securities. carrying on the activities as a depository. Commodities, General Corporate Commercial,
In most jurisdictions, custodians are not governed by the Financial Regulatory Practice, Compliance &
securities market regulators as they are considered to be mere Foreign Portfolio Investor Under Regulation 66 of the SEBI (Depositories and Participants) Investigation, Litigation & Dispute Resolution and
service providers and not as intermediaries. An applicant seeking registration under the SEBI (Foreign Portfolio Regulations, 2018, every participant has to preserve the following Policy & Advisory Practice. More details can be seen at www.regsla.com
andthey can be reached at info@regsla.com
Investors) Regulations, 2014 can seek registration in one of the records and documents for a minimum period of eight years:
Custodians usually provide services such as safekeeping of three categories mentioned in Regulation 5. Regulation 31 of the
securities, maintaining accounts of securities, collecting the same regulations require the foreign portfolio investor to preserve
benefits or rights accruing to the client in respect of securities, the following books of account, records and documents as
keeping the client informed of the actions taken or to be taken by specified in Regulation 30 for a minimum period of five years:
10 FORUM VIEWS - FEBRUARY 2019 11 FORUM VIEWS - FEBRUARY 2019
INSIGHTS - ECO
INSIGHTS - ECONBUZZ INSIGHTSINSIGHTS
- ECONBUZZ
- ECONBUZZ
which includes civil society towards the continues to underpin reform across negligible scrutiny where it was required
THE WORLD ECONOMY, larger objective of sustained economic countries is to create and strengthen the most. Institutions and incentives
SUSTAINABILITY AND progress. The fundamental function of
economic reform in every country is
mechanisms that would be more
effective facilitators of accountability and
(policy and non policy) were not aligned
to the objectives of either sustaining
INSTITUTIONAL REFORM similar- create or transform systems and transparency. Decades ago this fact was higher levels of economic progress
sustain structures that will support applicable mainly to developing and less or achieving higher levels of
By Professor Piya Mahtaney higher levels of growth and development. developed nations but in present times competitiveness.
its applicability to most nations is an
Economist / Author A report (2017) by the civil society undeniable fact. The interplay between Conclusion
reflection group on the 2030 agenda for politics and a narrow coterie of vested Compare the process of reform in any
I
t doesn’t take much to know that the prevalent situation in the global economy would demonstrate this point . In the sustainable development says, ‘In the interests is almost vividly played out in country to the process of human
world is in a state of flux, whether would not be one that was characterised history of transitional dynamics 2015 context of the 2030 Agenda, the almost every event that occurs in the evolution. The commonality is that both
viewed from the standpoint of present by stark inequalities of income, was an important year because it difference between partnership and global economy. Take for instance the do not cease. At various levels of
economic imperatives, changing joblessness and an infrastructure deficit. specified 17 sustainable development partnerships is not just semantic crisis of 2008. The meltdown of 2008 can development a country has to adapt and
geopolitics and with it the emergence of Not surprisingly only a handful of goals which are as follows: sophistry but reflects two fundamentally also be described as a crisis of reform. reorient its systems to newer sources of
a new world order. At any level change developing countries have being able to different views of the role of the State: on economic progress. Thus the
compels us one to recapitulate the achieve some progress in the ambit of Goal 1 is no poverty, Goal 2 is zero the one hand as duty-bearer, particularly When capital is scarce it represents a distinguishing feature is the kind of
reasons and factors that have led to the poverty reduction, however on the hunger, Goal 3 good health and well with respect to human rights, and as constraint however when an abundance reforms that a country needs to
present scenario and although it is overall poorer countries have remained being, Goal 4 quality education, Goal 5 central provider of public goods and of finance is veritably squandered away it undertake as this will vary in accordance
beyond the scope of this article to so or become poorer and across an entire gender equality, Goal 6 clean water services, on the other hand as moderator is a serious systemic flaw. This fact is to the prevalent socio-economic and
provide an exhaustive analysis of all gamut of developing and for that matter and sanitation, Goal 7 affordable and and facilitator of actions of various public strikingly epitomized by the financial political structures in each nation. The
those causes that have resulted in the even developed nations per capita clean energy, Goal 8 decent work and and private ‘stakeholders......’’. crisis of 2008 that was an outcome of discussion about institutional reform and
current situation (globally) before income has stagnated. economic growth, Goal 9 industry, capital mismanagement and impending governance will continue in the next
proceeding further a concise overview of innovation and infrastructure, Goal 10 “Instead of further promoting the financial reform that never occurred. article for Econ Buzz.
the same would be useful. reduced inequalities, Goal 11
It doesn’t take sustainable cities and communities,
misleading discourse of ‘multi-
stakeholderism’ and partnerships
When the Asian economic crisis
occurred over a decade ago it was a
Theoretically the fundamental principle much to know that Goal 12 is responsible production and between inherently unequal partners a wake call not just for reform in South East
underlying economic liberalization is consumption, goal 13 is climate
inclusiveness; the reality is a blatant
the world is in a action, goal 14 life below water, goal
fundamental change of course is
necessary. In order to achieve the SDGs
Asia but for the global financial system.
As is evident this did not happen and the Piya Mahtaney completed her second Master’s in
contrast to this. Neoliberalism as it has state of flux, 15 life on land, goal 16 Peace justice and to turn the vision of the consequence of this was an abundance
Development Economics from Leicester University
in England she embarked on a career in journalism
been practiced has been overtly non
inclusive and instead of being a strategy
whether viewed and strong institutions and goal 17 is
partnership for goals. The deadline for
transformation of our world, as
proclaimed in the title of the 2030
of capital on one hand and a shortage of
capital on the other. The proliferation of
with the Times of India. She was an assistant editor
in Metropolis on Saturday, subsequent to which she
that would complement existent from the standpoint achieving these goals is 2030. Each of Agenda into reality, we have to reclaim risky financial products was not matched
joined as senior feature writer in Economic Times.
As an economist that reported, analyzed and wrote
facilitators of development it sought to
dismantle the developmental state.
of present these goals are interrelated for instance
the elimination of poverty entails
the public (policy) space. ‘’ by a corresponding increase in on a wide range of socio-economic issues, writing a
book about economic development and the
productive capacity or the creation of
Efficient governance was equated with economic achieving zero hunger or for that matter Charting out a standardized package or real assets such as the expansion of
emerging trends of globalisation seemed almost
inevitable
minimizing the role of the government
and the core objective of economic
imperatives, the provision of decent work
opportunities entails an expansion of
blueprint of reform is not possible infrastructure, skills development and
The books that she has authored are as follows:
because the economic and social employment creation. It must be
development were skirted to periphery of changing infrastructure and industry and stepping circumstances, constraints, cultural emphasized that reform entails much
• India China and Globalization (2nd ed), Palgrave
Macmillan (England), December 2014
a set of priorities that assigned geopolitics and up the pace of innovation which in turn factors, political systems differ across more than putting into place an effective • Globalization and Sustainable Economic
Development, Palgrave Macmillan (U.S), August
precedence to the maximization of will be an important determinant of nations, even those that are distinctly regulatory framework because even if a
economic growth regardless of the costs with it the economic growth. Evidently achieving similar and all these aspects are deeply country has this in place it does not take
1st 2013
• Institute of South East Asian Studies (Singapore)
and adverse trade- offs that this resulted emergence of a these targets by 2030 requires that embedded in nation’s historical narrative. away the responsibility of being published an edition (August 2010) of my book
India China and Globalisation.
in. Instead of being a constituent of a dramatic progress be made by almost
much larger development narrative every new world order. every nation in the realm of institutional
The institutions which exist or those
which do not are the culmination of
cautious, and exercising the regulatory
authority in a non discriminatory,
• The first edition of India China and Globalisation
was published by Palgrave Macmillan (England,
other objective and concern was reform. myriad factors and therefore to even objective manner and avoid the 2007)
• Globalisation Con Game or Reality was published
subordinated to the primary purpose of At this juncture all countries are attempt conceptualizing a generalized unnecessary dilution of regulatory by Alchemy Publishers, India (2004) 2004.
increasing growth. By no means should confronted with the compelling need to Simply stated reform is not about strategy of institutional reform would be safeguards. The crisis of 2008 that • The first book titled Economic Con Game,
this be interpreted as an attempt to evolve sustainable systems of ideology, it is about enabling a nation’s an exercise in futility. However the occurred arose also as a result of a non Development fact or Fiction was published by
Pelanduk Publications (Malaysia) in 2002.
undermine the importance of increasing production, consumption and systems to function more effectively and highest common denominator that enforcement of regulatory authority and
economic growth rates, the point being distribution. Clearly the transition that by this is meant that is progressively
made is that economic progress the world needs to make towards better aligned with the well being of its
encompasses getting the dynamics of economic sustainability underscores the citizens. Empirical evidence provides us
growth right. In essence this means that exigency of institutional reform, which with ample reminders reform is not about
the benefits of increasing economic hangs in the balance. This brings us to replacing the dominance of the state
growth should translate into the main theme of this article which is with monolithic interests of a few in the
developmental outcomes. If this had reform. An enumeration of the private sector but about harnessing the
happened more substantively the Sustainable Development Goals (SDGS) synergies of state and non state actors
12 FORUM VIEWS - FEBRUARY 2019 13 FORUM VIEWS - FEBRUARY 2019
INSIGHT
INSIGHTS
SIGNING OFF 2018: INDIA EQUITY
MARKET PERFORMANCE
By Mahavir Kaswa
Associate Director - Product Management
S&P BSE Indices
T
he 2017 calendar year noted significant returns after a couple Exhibit 2: Sector and Size Wise YTD Total Absolute Returns
years with nearly flat returns. Continuing with the excitement S&P BSE SENSEX 6.8%
from 2017, the 2018 calendar year started with exuberance, as S&P BSE AllCap -4.2%
the S&P BSE SENSEX reached more frequent lifetime highs through S&P BSE LargeCap 2.7%
the end of January 2018. However, it failed to sustain these highs, as S&P BSE MidCap -14.1%
immediately after the budget was passed, the S&P BSE SENSEX and S&P BSE SmallCap -24.0%
all other leading indices experienced a sharp fall. As of Dec. 13, 2018, S&P BSE Information Technology
31.9%
the S&P BSE SENSEX gained approximately 1,872 points YTD, up S&P BSE Fast Moving Consumer Goods
11.4%
6.8% in terms of total returns. S&P BSE Finance
0.4%
S&P BSE Energy
0.2%
Exhibit 1: YTD S&P BSE SENSEX Performance S&P BSE Healthcare
-5.8%
40,000 S&P BSE Consumer Discretionary Goods & Services
[CATEGORY NAME]
39,000 [CELLREF] -15.4%
S&P BSE Utilities
38,000 -16.4%
[CATEGORY NAME] S&P BSE Basic Materials
37,000 [CELLREF] -18.4%
36,000 S&P BSE Industrials
-19.9%
Performance
35,000 S&P BSE Telecom
34,000 -41.2%
33,000 -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50%
[CATEGORY NAME]
32,000 Total Absolute Return
[CELLREF]
31,000 Source: Asia Index Private Limited. Data from Dec. 29, 2017, to Dec. 13, 2018. Index
30,000 performance based on total return in INR. Past performance is no guarantee of future results.
29,000 Chart is provided for illustrative purposes.
Dec. Jan. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec.
29, 2017 29, 2018 01, 2018 01, 2018 01, 2018 01, 2018 01, 2018 01, 2018 01, 2018 01, 2018 01, 2018 01, 2018
Source: Asia Index Private Limited. Data from Dec. 29, 2017, to Dec. 13, 2018. Index Outlook: With the U.S.-China trade war not cooling off, the IMF’s
performance based on total return in INR. Past performance is no guarantee of future results. recent revision of the global GDP growth estimate to 3.7% in 2018
Chart is provided for illustrative purposes.
from 3.9%, and the downward bias in India’s GDP growth, the Indian
equity market is expected to remain volatile in the near future. Market
After witnessing the least volatile year during 2017 (with an
participants may also be interested in seeing how the government of
annualized volatility of 8.9%), the Indian market has seen an uptick in
India will respond to the recent losses in state elections, and how this
volatility during 2018, with an annualized volatility of 12.5%. On the
may affect voter confidence in the upcoming general elections in
global front, higher oil prices, the U.S.-China trade war, and global
2019.
monetary tightening were the top three drivers of volatility. On the
domestic side, factors such as the introduction of the long-term
capital gains tax on equity, perceived overall higher valuations of DISCLAIMER: The S&P BSE Indices (the “Indices”) are published by Asia Index Private
Indian equities, increasing interest rates, concern over falling GDP, and Limited (“AIPL”), which is a joint venture among affiliates of S&P Dow Jones Indices LLC
lately, then on-banking financial company (NBFC) liquidity crisis kept (“S&P DJI”) and BSE Limited (“BSE”). Standard & Poor’s® and S&P® are registered
the market volatile throughout the year. trademarks of Standard & Poor’s Financial Services LLC and Dow Jones® is a registered
trademark of Dow Jones Trademark Holdings LLC. BSE® and SENSEX® are registered
trademarks of BSE. These trademarks have been licensed to AIPL.
The S&P BSE AllCap, which covers more than 95% of India’s listed
equity universe in terms of total market capitalization, declined by Past performance of an Index is no guarantee of future results. AIPL, S&P DJI and BSE
4.2%. The declines in the S&P BSE MidCap (-14.1%) and S&P BSE (the “AIPL Companies”) make no representation or warranty that investment products
SmallCap (-24.0%), with the simultaneous positive returns for the S&P based on any Index will accurately track index performance or provide positive
BSE SENSEX (6.8%) and S&P BSE LargeCap (2.7%), could be investment returns. The AIPL Companies do not make investment recommendations and
do not sponsor, endorse, sell, promote or manage any investment fund or other
attributed to a shift in focus of investors from mid-cap and small-cap investment vehicle that seeks to provide an investment return based on the performance
stocks to relatively safer bets in large- or mega-cap stocks. of any Index. Performance returns for an Index do not reflect payment of charges or fees
an investor may pay for investable instruments. AIPL Companies receive compensation
On the sectoral front, the S&P BSE Information Technology and S&P in connection with licensing Indices to third parties. AIPL Companies. For more
BSE Fast Moving Consumer Goods noted gains of 31.9% and 11.4%, information on any of Indices please visit http://www.asiaindex.co.in/.
respectively. The revival in demand and sharp depreciation of the
Mahavir Kaswa is Associate Director, Product Management for equity and strategy
Indian rupee helped the Information Technology sector, whereas Fast indices in India and its neighboring countries at Asia Index Pvt. Ltd-a joint venture
Moving Consumer Goods stocks noted positive total returns, between S&P Dow Jones Indices and BSE Limited. His objective is to expand the
reflecting India’s consumption story. business in the region through identifying local market trends and ensuring new
products and services are aligned to the needs of the local market.
Meanwhile, the S&P BSE Finance and S&P BSE Energy ended flat. The He has more than 10 years of experience in the capital market industry. Prior to joining
S&P BSE Telecom was the worst-performing sector index, with a total Asia Index, He worked at BSE Limited where he got an opportunity to work on a variety
return of -41.2% - not surprising, given that most telecommunication of indices, including thematic, strategy, and volatility.
services companies tend to be highly leveraged and are facing a He has a Master’s of Commerce from Pune University, and is a Chartered Financial
potentially intense price war. Analyst, USA.
14 FORUM VIEWS - FEBRUARY 2019
15
TECH-SPEAK
TECH-SPEAK TECH-SPEAK
TECH-SPEAK
who have successfully moved multi- When to Choose As-a-Service options: infrastructure footprint to the ebb and flow
ENTERPRISE SOFTWARE OPTIONS: petabyte deployments to the cloud is
impressive, even dark fiber lines can’t fully The organization values agility: In late
of their subscriber base - without hefty
carrying costs, rollout logistics and bloated
LEGACY VS. CLOUD ameliorate the time and hassle associated
with an on-premise to cloud migration. Nor
2016, it was predicted that 80% of overhead from over-provisioning.
enterprise IT offerings would be sourced on
can some legacy gear be readily migrated a pay as you consume, OpEx model. The Tips for Working SaaS Strategies:
to a cloud modality. Sometimes it’s just guidance was prescient given that by the SaaS software is not a one-size-fits-all
By Jayesh Shah more time- and cost-effective to retain fall 2016, at least seven major vendors had proposition. Costs and benefits vary
Promoter, Prism Cybersoft Private Limited certain applications and storage assets on debuted On Premise, As a Service options, greatly, as do the short-term and long-term
premise, move other applications to the reiterating that it is a fundamental shift in trade-offs. Following are a few things you
cloud, and frame a hybrid infrastructure
E
nterprise applications and software want to continue doing something that more complicated by the overwhelming how enterprise IT is delivered. Following can do along the way to ease the transition.
uniting them. the success of Amazon Web Services
systems have a reputation for being doesn’t work well, they often respond number of vendors and products. What’s
clunky, expensive, and almost along the lines of, “Because that’s the way more, hybrid and multicloud approaches (AWS) - from $0 in2006 to almost $8 billion SaaS allows for an economic shift to
When to Choose cloud architectures: business ten years later, and the dominant relatively low-cost subscriptions that
impossible to keep up to date, but that we’ve always done it.”So we need to get blur the lines between the cloud and on-
doesn’t need to be the case. Rethinking over it. But how? premise deployment options. force among hyperscale cloud providers include upgrades and maintenance (an
There is significant or uncertain growth
your software strategy to include cloud with nearly 3x larger than its next largest operational expenditure). This is instead of
ahead. Cloud deployments provide more
options like SaaS can reap benefits, but With an operations team that counsels competitor, the OpEx solutions concept substantial up-front, on-premises software
flexibility to “walk before you run” by
beware the pitfalls. Enterprise organizations on which type of architecture getting things right on a smaller scale, and
has spread through networking, security investments that require subsequent
and storage sectors. As vendors watch maintenance investments and IT’s help (a
applications and is best for them – on premise, cloud, hybrid then scaling from there.
customer adoption, industry analysts have capital expenditure). Regardless of what
How to remove Inefficient Software in or multicloud – and then evaluates what
Your Organization software systems went well and didn’t in all four kinds of A variable business demands flexibility. predicted additional OpEx-solution shifts. type of software you choose, though, it’s
have a reputation for deployments, here’s our view of what For example, if one location is planned for a wise to think beyond today’s requirements
It’s time for corporates to adopt modern IT resources are limited: As-a-service so you have a better chance of avoiding
approaches to software, like SaaS, and
being clunky, situations tip the scale toward one
approach or another. While the context is
cloud rollout first, or one business unit
offerings put the vendor in charge of unforeseen challenges and costs in the
experiences dramatic seasonal variability,
that means embracing change and expensive, and almost data storage, this analysis applies to most a cloud architecture makes it easy for IT operation, maintenance and upgrades. It’s future.
abandoning clunky, expensive, difficult to impossible to keep up enterprise IT scenarios. teams to move in an agile fashion with the easy scaling up - and equally importantly,
use and almost impossible to keep up to scaling down - and letting those who know If you’re piloting a new type of software,
date. to date, but that When to Choose on-premises
ebb and flow of today’s dynamic business
models. This is particularly true when the the most about the product hassle with the SaaS is probably the way to go because
doesn’t need to be architectures: business itself is a software-as-a-service mundane details. This frees IT teams to you can usually experiment without a long-
With the emergence of software as a
service (SaaS) this will end the record of
the case. Rethinking offering with its inherent variability. focus on their core deliverables that
accelerate the business and avoids being
term commitment. However, be mindful of
the potential integration, security and
Security is an emotional subject.
disappointing performance, but somehow, your software strategy Security considerations are always You want an “aw, crap!” button. The stuck with the wrong equipment, and governance challenges you may encounter
you’re able to stay in the 21stcentury and to include cloud paramount, but some sectors have a gut DevOps philosophy of rapid rollout then wasting time on low-value, high-effort as you attempt to connect different data
drive both IT teams and employees crazy. level reaction to the cloud, and the decision tasks. It allows them to respond to sources.
options like SaaS can stops there, period. For example, if the
continuous iteration is permeating more
than just test and dev teams. That said, business demands promptly, with a right-
In today’s smart mobile world, everyone reap benefits, but sheriff deploying a body worn camera sometimes a major correction quickly sized architecture. Doing this can allow IT If you’re in production, you’ll want to
has a machine in their pocket that’s more
powerful than building-sized computers as
beware the pitfalls. application fears the team could not becomes evident. Cloud- enabled teams to effectively deliver infrastructure continuously assess your requirements in
demonstrate a chain of custody over digital architectures are far more malleable and for a new application without delay and terms of software models, integration,
in the past. From those devices, we’re able evidence in a cloud-based architecture -- enable IT organizations to morph the without having to free up purchasing compliance, governance and security. As
to do our bank transaction, watch our Champion the benefits of change meaning evidence becomes inadmissible deployment at will, providing a safety budgets for it. you continue your move into the cloud,
favorite TV shows, order our favorite dish “Change imposed is Change opposed.” in court measure. understand what’s holding you back.
and chat with friends halfway around the Change is stressful, and it’s hard to get Projecting future demand is uncertain: Finance and HR, for instance, may still
world using compact software that’s easy people to leave their comfortable-yet- Governance rules are tricky. Beyond It’s time for radical change. In addition to For example, with data storage, most hesitate to store their sensitive data
to install, use and maintain. inefficient present for an unknown future. SEBI, and multiple exchange compliance – the well-publicized cost and agility organizations don’t accurately know their anywhere but on-premises. For the
Often, business leaders are so worried and other modern data sovereignty advantages of the cloud, changing from on- requirements in 3- to 5-years. The OpEx foreseeable future, you’ll probably have a
The universe of cloud-based consumer about a potential uproar after a change that practices – when IT architectures in a premise to cloud infrastructures has wide- approach enables the team to test before hybrid strategy that becomes more cloud-
software was supposed to drive a they don’t even try. And, again we’re stuck vertical sector must demonstrate physical reaching impact on networks, bandwidth, they buy, and instead of worrying about based with time.At each stage, it’s wise to
revolution in business applications via the with the miserable software. Getting as well as virtual control over data at all real estate and more. The cloud’s agility right-sizing storage today, focus on understand the potential risks and rewards
“consumerization of the enterprise.” But in unstuck is just a matter of educating the times, an on-premise paradigm may be and breadth of on-demand services enable selecting a solution that meets today’s beyond what’s obvious today.
reality, we are still working on old legacy stakeholders on why change is the easier to comprehend. teams to make more changes with less needs, has the ability to scale to at least an
system, why? bestchoice and providing clarity on what is effort and over a shorter period of time. order of magnitude greater than the largest
in it for them. If you can demonstrate that Legacy applications are immovable. Jayesh Shah holds B.S. and M.S. in Computer
envisioned deployment, and has the Engineering from University of Bridgeport, USA. He
We’re stuck in the past what once took 20 clicks now takes eight, Most applications are available either in When to Choose traditional CapEx
elasticity to scale both up and down. has more than 25 years of experience in field of IT.
When we discuss implementing a new tool that at ask that previously took three hours the cloud or on-premise, but some legacy purchases:
He promoted Prism in 1996 and as its MD and CEO
with enterprise customers, we are often now takes one, you’ll get the buy-in you software has licensing restrictions or There’s a Use-It-Or-Lose-It budget Your product or solution is an As a provides Vision, Direction and also takes care of
surprised by their commitment to the way need to effect change. proprietary dependencies that preclude situation. If you simply can’t get funding Service offering: Software application Strategic Affairs, Marketing and Commercials.
things have been. When we discuss with cloud usage - making on-premise or hybrid any other way than a CapEx appropriation - providers and service providers alike are Prism has recently been awarded by STPI & CeBIT
them about the new adoptions of How to decide between cloud, on- deployment a requirement. the choice is made. Market research and better able to manage costs and profit INDIA for Best IT Exhibitor of ‘Make in India’ Pavilion
technology, we are many times surprised premise and As-a-Service others confirms this approach is steadily margins if they can continually match their
at CeBIT India 2014.
by their insistence to replicate current Deciding whether and how to use cloud Migration size and time are formidable. waning.
inefficiencies. When we ask why they computing is a complex, and made all the Although the track record of organizations
16 FORUM VIEWS - FEBRUARY 2019 17 FORUM VIEWS - FEBRUARY 2019
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