The objective of these rules was to create a regulatory framework for merchant bankers, their competence, liability and continuation in the securities market.
Merchant bankers play a key role in the primary market and are tasked with ensuring due diligence, maintaining the integrity of the primary market and ensuring compliance with relevant laws on their own account and on behalf of issuers.
As a result of the evolution of the securities markets and overall increased compliance requirements, the roles and responsibilities and business undertaken by bankers in the primary market have increased significantly.
Under the new changes proposed in the consultation paper, SEBI wants to review the activities of bankers, change the capital adequacy requirements.
The regulator has also proposed introducing a minimum liquid net worth, apart from reviewing the legal framework to allow registration.
Among the proposed changes, Sebi said directors, key employees, compliance officers and their relatives cannot hold securities in the issuer company.
The regulator said the existing MB regulations need to be aligned with amendments to other SEBI regulations and with the existing ecosystem and henceforth review.
SEBI also wants clarity on the activities allowed to bankers and to ensure that only serious players remain in the securities market.
The regulator is proposing to delete provisions that have become reductive and enhance their utility.
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