Mumbai, January 22, 2018
The registration process on an average according to market participants has doubled or become three times as against the earlier timeline of a month
The Securities and Exchange Board of India or Sebi’s online filing and registration system for intermediaries to usher in ease of business has had a mixed effect. The registration process on an average according to market participants has doubled or become three times as against the earlier timeline of a month.
This is due to inefficiencies in the recently installed information technology systems which is also leading to double filings once online and then manually, said four people with direct knowledge of the matter including lawyers, consultants, advisors, fund managers on condition of anonymity.
The market intermediaries and consultants are planning to write to Sebi on the issues they are facing during the registration processes.
In an emailed response to Mint queries Sebi said that ‘the average time taken for processing of registration is about two months’. Sebi had moved to an online filing and registration system in May 2017. This was a part of budget announcement for 2017-18 where the Finance Minister had announced that the process of registration of financial market intermediaries like mutual funds, brokers, portfolio managers, etc. will be made fully online by Sebi.
“This will improve ease of doing business,” said Arun Jaitley during the budgetary announcement.
According to the data shared by the regulator with Mint since June 2017 Sebi has received 66 stock broker applications and they took on an average 67 days to be processed. This is more than three times the time taken before June 2017.
“Alternate Investment Fund (AIF) application processing used to take five to six weeks, but now its is taking up to 12-14 weeks. Same for stockbroking, which usually takes 21 days, but some people have had to wait for close to 3 months,” said an advisor dealing with Sebi applications for various investors.
According to the regulator’s data Sebi took an average of 78 days to complete registration for 30 sub-brokers, 67 days for 13 depository participants, 40 days for 12 merchant banker applications, 138 days for one transfer agent application and two days for processing an application of a banker to an issue. Sebi data did not include the time taken to process AIF applications. The data is from June 2017 (since applications moved online) to date. In certain cases the time taken has doubled and in certain cases it has reduced by slight margin.
The market participants say they are encountering multiple issues and are finding it hard to manoeuvre the online filing systems.
“Sometimes the system is not working. Even after filling the whole application the system does not save it so you have to do the whole thing again, while at other times the number of characters are a problem and sometimes logging into the system itself is difficult,” said a lawyer who regularly deals with intermediary filings he too declined to be named as he consults with Sebi on regular basis for these issues.
“Despite having taken registration numbers couple of months ago, people have been struggling to file the applications. Investors are feeling that things are moving very slow. Across areas they are stuck with slow moving process due to the technical issues plaguing the online process,” said the advisor quoted earlier.
An AIF manager says that in some instances the investors and intermediaries had to do dual filings once online and then manually as the systems kept indicating errors.
“It seems that the Sebi IT systems have a bug as long as they rectify it should be fine. As moving online is a good move,” said a Managing Partner of another law firm.
While others say that online application forms need to be reworked as in many instances it is seeking incomplete or unnecessary information.
“The application forms do not have columns or fields to fill all the required information for a venture capital fund which leads to an incomplete application thereby bound to be rejected. And in other instances it asks for redundant information which just increases compliance burden,” said the AIF manager quoted earlier.