Sebi to clear milder version of draft insider trading norms

The Securities and Exchange Board of India (Sebi) is set to overhaul the insider trading norms, first framed two decades ago. The regulator is expected to approve the new norms at its board meeting on November 19.

Sources in the know said the new rules would be far more stringent than the regulations currently in place but not as strict as those mentioned in the draft document circulated in December last year.

For example, in the definition of “connected persons”, public servants might not be specifically mentioned as insiders. Also, disclosing due-diligence procedures by companies to stock exchanges might not be part of the regulations.

“In the final guidelines, the market regulator has taken into consideration the feedback received from various intermediaries. Their concerns have been ironed out,” the sources said.

The insider trading norms will define connected persons on the basis of the duty they perform for a company and the legal relation they have with the listed entity and its promoters.

In the draft regulations formulated by the insider trading committee, led by judge N K Sodhi, a connected person was defined as someone connected with a company in any capacity (including people who had frequent communications with company officers) in the six months prior to the trade.

The draft regulations had made headlines for their inclusion of public servants in the definition of connected persons. But in the final guidelines, public servants and ministers might not find a specific mention.

“If public servant or the media act on any insider information, they will be examined. However, there would not be any specific provision to deal with them,” said a source.

In the draft regulations, any due-diligence that companies engaged in needed to be declared to stock exchanges two days before any trading activity was undertaken in the stock. But the final norms might not find mention of due-diligence aspects.

“Dealing with situations where there is no intent to conduct a mala fide transaction needs clarity. Just declaring due-diligence two days before trade does not solve the problem and is not practical,” said Raja Lahiri, partner, Grant Thornton.

However, there is another section of market that believes any form of price-sensitive information should be available to all types of investors. “The due-diligence aspect is the heart and soul of the regulations. Every investor has the right to access the information, whether positive or negative, about a company” said J N Gupta, chief executive officer, SES proxy advisors.

In December last year, the prohibition of insider trading (PIT) committee had given its report to the market regulator. Sebi later invited comments on the draft regulations.

So far, the market had been operating under the PIT regulations of 1992.

Legal experts say persons with fiduciary duty to shareholders are supposed to put shareholders’ interest ahead of their own and, thus, should be labelled as insiders.

Gupta says it is difficult to pinpoint an insider and charge him or her for it. “Before charging an insider, it needs to be proved without a doubt that the person has acted on unpublished price-sensitive information,” said Gupta.

Sebi is also thinking about introducing a “trade plan” for companies that want to deal in their own shares. Under the plan, companies and promoters will be required to declare their intent of trading in their own shares and mandatorily conduct such trades six months later.

Experts say trade plan will aid in removing the hassles companies earlier faced in trading in their securities.

“India currently needs a mature structured way of trading as suggested in the trade plan. And, we believe a six-month time is a reasonable cool-off period for companies to execute trades in their own scrips,” said Lahiri.

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GOING SOFT

Draft norms

• Connected persons defined on the basis of association and responsibility to a company
• Connected persons include public servants
• Due-diligence required to be declared to bourses 2 trading days before proposed trade

New norms

• Connected person is someone who is related to a firm in any capacity
• No specific mention of public servants as connected persons
• Due-diligence aspects will not be mentioned

Board meets on Nov 19; new rules to modify definition of connected persons, may skip due-diligence disclosures

Migratory birds, mammals and fish get new UN protection

Polar bears, whales, sharks and gazelles were among 31 new species granted new protection status on November 9 by the UN conservation body, following six days of talks by leading conservationists.

The UN Conservation of Migratory Species of Wild Animals (CMS) said six days of “intense negotiations” led to new protection for scores of bird, fish and mammal migratory species.

A record 21 species of shark, ray and sawfish were added to the list. The polar bear, which is found in the Arctic, and the widely-distributed Cuvier’s beaked whale made the list too. Also newly protected are the red-fronted gazelle, common in Africa, and the great bustard, found in Europe and Asia.

“Migratory animals have become the global flagships for many of the pressing issues of our time,” said CMS executive secretary Bradnee Chambers.

“From plastic pollution in our oceans, to the effects of climate change, to poaching and over-exploitation, the threats migratory animals face will eventually affect us all.”

More than 900 experts from 120 countries met for the six-day meeting, approving all but one proposed species to be included on the protected wildlife list. The African lion did not make the final cut because there was not enough information from the countries on where it lives.

Securing Kabul

NATO’s withdrawal from Afghanistan will not have the impact some observers were fearing. The new rulers of Kabul, President Abdul Ghani and Chief Executive Officer Abdullah Abdullah, have signed the agreement with the US that former President Hamid Karzai kept rejecting for months.

According to this agreement, US forces can stay in Afghanistan “until the end of 2024 and beyond”, mostly in nine major land and air bases. But this Bilateral Security Agreement, as it is called, is mostly intended to enable the Americans to train the 3,50,000 Afghan security forces. Not only will American troops be reduced to 9,800 over the course of the next year, but most of the remaining sophisticated arms that the US had brought to Afghanistan will also return home.

Will the Afghan National Army (ANA) be able to resist the Taliban, which has already rejected Ghani’s invitation for peace talks? Once Nato pulls its air assets out of the country, the Afghan air force will not be in a position to sustain military operations. Not only because it does not have the needed modern military aircraft (including helicopters), but also because it will have trouble obtaining working replacement parts.

Western countries may provide some help, but they are already channelling vast funds into the country’s defence. And there are other problems. The legitimacy of the ANA is somewhat affected by its ethnic character — a majority of its officers are of Tajik origin — and the desertion rate remains very high because of the low pay, especially given the risks taken by security personnel and compared to what the Taliban sometimes offers. Already, many regions are de facto in the hands of the Taliban, which exercises administrative power, levy taxes, regulate opium cultivation/ transformation and dispense some form of justice. This is true not only in the south and in the east, but also in the north, at least in the Kunduz area.

If the Afghan regime is destabilised by the Taliban and no Western government is prepared to intervene, who will? Among the neighbours, the only countries that have the potential to play a stabilising role are India and China. However, India has been reluctant to engage with Kabul intensively in the defence sector, in spite of having made commitments over the last 10 months. Not surprisingly, Ghani has now decided to shelve Afghanistan’s demand for military equipment from India, also because partnering with India would complicate the already bitter Af-Pak relations. Last week, Beijing became his first international port of call. During the visit, Ghani remarked, “The only one who can be effective in peace is the one who has good relations with all sides” — an oblique comment on India’s position.

Till recently, China’s interest in Afghanistan was solely economic. It had invested heavily in Afghanistan’s copper reserves and oil fields, and promised infrastructural development. Now, Chinese President Xi Jinping has not only committed to investing more in Afghanistan, but also hinted that the Chinese will step up their security engagement in Afghanistan in the coming years.

And with good reason. First, a large portion of the opium consumed in China comes from Afghanistan and Beijing has long viewed drug consumption as a serious danger to its society. But Chinese engagement in Afghanistan is primarily driven by the Uighur militancy, considered the biggest threat to the country’s internal security. The Uighurs are a 10-million strong Turkic Muslim community resisting “Hanisation” and state oppression under the rubric of an ethno-religious separatist movement. Xinjiang, the province that is home to most of China’s Uighurs, is strategically important not only because it is rich in gas, oil and coal reserves, but also because it represents one-sixth of the country’s landmass and is bordered by eight neighbouring countries, including Afghanistan.

Now, the Turkistan Islamic Party, a prominent strand of the Uighur movement, which has claimed responsibility for a number of the killings in the last few months — 29 people died in mass knife attack at Kunming station this May, for instance — has close ties with Islamist groups in the Af-Pak region. These include the Islamic Movement of Uzbekistan, whose leaders have found refuge in the same area.

But what can the Chinese do? They are no more willing than India to deploy troops. So they may arm the Afghanistan government and train its security forces instead. As Avinash Paliwal mentions in a recent Observer Research Foundation brief, China has already trained hundreds of Afghan policemen and provided a few million worth of material and logistical support to the ANA. It may well do more. But what if this is not enough, as one may well anticipate?

The other card China may play is Pakistani. The Pakistan army has already handed over to Beijing the Uighur activists it has captured in the Federally Administered Tribal Areas (FATA) over the past few years. And the North Waziristan operation launched in June may have been partly suggested by Beijing — much like the 2007 Red Mosque operation — in the context of the intensification of “Uighur terrorism”.

The magnitude of this operation, which officially began on June 15, is unprecedented, mainly because of the number of internally displaced persons it has generated: one million. By early September, the army had announced 910 terrorists had been killed (whereas 82 soldiers had died), dozens of hideouts and 27 explosives and arms-making factories had been destroyed.

But the army admitted that most of the militants had crossed over to Afghanistan, except the foreigners, mainly Uzbeks, who did not have the benefit of tribal solidarity. This is probably something Beijing appreciated, but it is revealing of the challenge the region is facing. On one hand, the Pakistan army will probably target the “foreigners” more and spare the “good Islamists”, including the Haqqanis, in order to help the Taliban restore its “strategic depth”. On the other hand, Kabul will fight the Haqqanis (the ANA recently arrested two senior leaders of the network), but protect others, including Tehreek-e-Taliban Pakistan (TTP) chief Mullah Fazlullah, who has probably been in the Afghan province of Kunar since 2010. Ironically, Afghanistan has become for the TTP the same kind of safe haven that the FATA and Quetta used to be for al-Qaeda and the Afghan Taliban.

One way out may be to follow the recommendations of Lt Gen (retd) Talat Masood of the Pakistan army: “If we are unable to convince the Haqqani leadership and Quetta Shura that they should work out a negotiated settlement with the Afghan government then what have we gained by hosting these groups apart from inviting the hostility of the Afghan government and the international community and much worse?… If Pakistan and Afghanistan were to take each other’s insurgencies seriously and cooperate, it would be far easier to contain them.”

While the Pakistan army may not listen to these lucid words, it may still initiate a paradigm shift under Chinese pressure. If not, China’s confidence in the Pakistani military to seriously tackle Islamist movements may dwindle, especially after Rahmatullah Nabil, acting director of the Afghan intelligence agency, who reached Beijing a few days before Ghani, made clear to the Chinese that most of the Uighurs captured by the ANA had been trained in Pakistan. In other words, the “all weathers friend” was not that reliable.

In response, Beijing may renew its overtures to New Delhi and Moscow to form joint counter-terrorism forums, an eventuality the Pakistan army would not want to occur. But China’s capacity to address the Islamist phenomenon in its entirety remains to be seen. In fact, it is a major test for a country that, till now, has not paid much attention to threats beyond its borders. The way it responds to Kabul’s invitation to intervene more in Central Asia may begin a new chapter — or not.

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40 years ago...and now: Still a lot of ground to cover on social indicators

Despite emerging one of the largest economies in the world, India's performance on various socio-economic indicators has been far from satisfactory. While the progress made over the past decades is undeniable, the country still lags considerably on various development indicators, even compared to countries with lower levels of per capita income.

At the aggregate level, life expectancy in India rose from 58.5 years in 1990 to 66.2 years in 2012. Women's life expectancy is estimated to be even higher at 68 years. While progress has been made, China achieved this level of life expectancy three-and-a-half decades ago. Even Bangladesh, whose per capita income is roughly half of India's, achieved it a decade ago.

While there exists a marked variation on infant mortality rate (per 1,000 live births) at the state level, at the all-India level, it had fallen from 88.4 in 1990 to 41.4 in 2013. By comparison, China achieved the same level nearly two decades ago, South Korea four decades ago and Bangladesh four years ago. The maternal mortality rate, estimated at 178 deaths per 100,000 live births, is way behind the target of 103 deaths, to be achieved by 2015 under the United Nations Millennium Development Goals. A comparative view of how far behind India is on various socio-economic indicators is reflected in theUnited Nations Human Development Index (2014). The index, estimated by using country-level information on life expectancy, education, and income indices, is used to rank countries. India ranks 135 out of 187 countries on the index, only seven positions ahead of Bangladesh. It is way behind Sri Lanka, which is at 73. Nepal and Pakistan, with lower levels of per capita income, are ranked 145 and 146, respectively.

Successful Flight Testing of LR SAM Missile

The Long Range Surface to Air Missile (LRSAM) is successfully flight tested against a flying target in a range in Israel, today. Israel Aerospace Industries (IAI), Israel has carried out the test in the presence of DRDO scientists and officials of the Indian Armed Forces. The LRSAM system is jointly developed by DRDO and IAI Israel. All the systems including the radar, communication launch systems and the missile system have performed as expected and hit the target directly and damaged. The system is developed for both Israel Defence Forces and Indian Armed Forces. Scientific Advisor to Defence Minister Dr. Avinash Chander has witnessed the test along with President of IAI Mr. Joseph Weiss and other top officials of Israel Defence Forces. He termed the event as a milestone in the cooperation between two countries in developing advanced weapon systems.

PM launches Jeevan Pramaan – Digital Life Certificate for Pensioners

Huge relief for senior citizens who have to produce Life Certificates each year to continue receiving pension The Prime Minister, Shri Narendra Modi, today launched "Jeevan Pramaan" – an "Aadhar-based Digital Life Certificate" for pensioners, in a move that could eventually benefit over a crore pensioners. The Prime Minister said that after the push towards self-certification, this digital life certificate was another enabling mechanism which would benefit the common man. The proposed digital certification will do away with the requirement of a pensioner having to submit a physical Life Certificate in November each year, in order to ensure continuity of pension being credited into his account. The Department of Electronics and IT has developed a software application which will enable the recording of the pensioner`s Aadhar number and biometric details from his mobile device or computer, by plugging in a biometric reading device. Key details of the pensioner, including date, time, and biometric information will be uploaded to a central database on real-time basis, ultimately enabling the Pension Disbursing Agency to access a Digital Life Certificate. This will conclusively establish that the pensioner was alive at the time of authentication. The earlier requirement entailed that a pensioner either personally presents himself before the Pension Disbursing Agency, or submits a Life Certificate issued by authorities specified by the Central Pension Accounting Office (CPAO). At present, 50 lakh individuals draw pension from the Central Government alone. A similar number draw pension from State and Union Territory Governments. Several PSUs also provide pension benefits. Over 25 lakh retired personnel draw pension from the Armed Forces. The Aadhar-Based Digital Life Certificate will go a long way in reducing hardship which so many senior citizens have to go through to produce a Life Certificate every year. The software application system will be made available to pensioners and other stakeholders on a large scale at no extra cost. It can be operated on a personal computer or a smartphone, along with an inexpensive biometric reading device. This facility will also be made available at Common Service Centres being operated under the National e-Governance Plan, for the benefit of pensioners residing in remote and inaccessible areas.

india Signs Loan Agreements with World Bank for US$ 200 Million for Technology Centre System Programme (TCSP)

The Loan Agreement for World Bank (IBRD) financing of US$ 200 million for Technology Centre System Programme (TCSP) was signed here today between Government of India and the World Bank             The Loan Agreement was signed by Shri Tarun Bajaj, Joint Secretary, Department of Economic Affairs on behalf of the Government of India and Mr Onno Ruhl, Country Director (India) of World Bank on behalf of the World Bank.  Representatives from Ministry of Micro, Small & Medium Enterprises (MSME) and the World Bank, among others, were present on the occasion.             The Technology Centre System Programme (TCSP) is for setting-up 15 new Technology Centres (TCs) and to modernize/upgrade existing 18 TCs at an estimated cost of Rs. 2200 crore (US$ 400 million) including World Bank assistance of US$ 200 million.             Project Components: The project will have three components which are: (i) Technical assistance to the Technology Centers (TCs), (ii) Investment to upgrade existing/develop new TCs and (iii) Technical Assistance to the MSME Ministry for programme implementation and monitoring & evaluation.             The Objective of the project is to enhance the productivity of MSMEs by improving their access to technology and business advisory services as well as skilled workers through systems of financially sustainable technology centers.             The programme beneficiaries will be Indian MSMEs and larger firms as well as trainees and workers.                         The loan is for an implementation period of 5 years. The Office of Development Commissioner, Ministry of MSME is the implementing agency.