Sebi clears UTI, ICICI venture funds

The securities regulator has also granted approval to ICICI Venture Capital Fund to raise Rs 10 crore under ICICI India Opportunities Fund. A Sebi release said that the fund will coinvest along with the venture capital fund and the private equity funds managed by ICIC Venture Funds Management Company Limited.

Incidentally, venture funds, even though registered under the 1996 regulations of Sebi, will also be eligible for tax pass-through status as provided for in the current Finance Bill.

The new guidelines for venture funds, based on the recommendations of the Chadrasekhar committee is expected to be ready in less than a month’s time, Sebi officials said.

Sebi has also granted registration to India-Human Capital Fund which will have a corpus of Rs 200 crore. The fund has been promoted by HDFC, Ambit Corporate Pvt Limited and Gary Wendt, former worldwide Chairman of General Electric Capital Corporation.

The purpose of the fund is to identify, invest and assist in building businesses that harness Indian human capital to develop successful ventures for Indian and international markets. With these, total 25 venture capital funds have been granted registration by Sebi, it said.

Meanwhile, the (Sebi) is planning to retain the mark to market margin along with volatility margins albeit in a more simplified format, underlined by an initial margin that will be imposed at a flat rate.

A change in the format of margin calculation is envisaged and margins might no longer be based on members’ gross exposures. The risk management committee which will meet on Wednesday will discuss and take a decision on the recommendations made by the committee’s sub-group which submitted its report today.

The sub-group which discussed rationalisation of the margins expressed its satisfaction with the current margining structure. Sebi officials said that the present system was working very well and there was no actual dissatisfaction with it – "but we need to fine-tune and simplify the structure," they said.

So while the mark to market margin will remain, all scrips will be subject to an initial flat margin. This will be standard. Sources said that complying with representations from various stock exchanges and market participants, it has been proposed to do away with the gross exposures of brokers as a criterion for imposing margins.

Top officials of Sebi said that volatility margins would have to be there but the plethora of slabs which characterises it now would not be there. It is expected that a flat volatility rate would be imposed depending on the degree of volatility, liquidity of the scrip and so on.

According to sources, the number of scrips which attract volatility margins are very few. Sources said that, according to the members in the sub-group, there was a general opinion that there was no pressing need to make any radical changes in the margining system. According to Sebi, the system had helped in containing volatility and preserving the integrity of the market place.

There has been a long standing demand for rationalisation of the margining structure – as there are a number of margins including daily margins, special margins, volatility margins, additional volatility margins, not to speak of mark to market margins.

The amount collected in margins, in recent times, often amounts to more than 50 per cent of the total exposure in a day. Finetuning of the margining structure by Sebi is an ongoing activity and the current exercise is a continuation of its evolutionary strategy, sources said.

The meeting on Wednesday is also expected to take some decision on the rather thorny issue of circuit filters though Sebi officials were not willing to comment on it.