SEBI extends timeline for verification of market rumors by listed entities

SEBI extends timeline for verification of market rumors by listed entities

Subject: Economy

Section: Capital Market

Securities and Exchange Board of India (SEBI) has extended the timeline for verification of market rumors by listed companies. The new dates are February 1, 2024 for the top 100 listed entities by market capitalization, and August 1, 2024, for the top 250 listed entities by market capitalization. The earlier dates were October 1, 2023, and April 1, 2024, respectively.

SEBI introduced these changes earlier this year in order to avoid the establishment of false market sentiment or impact on the securities of the entity. The new rules require listed companies to verify and confirm, deny, or clarify any market rumour concerning them within two business days of becoming aware of it.

A positive step by SEBI to protect investors and ensure the integrity of the stock market. Market rumors can often be inaccurate and misleading, and they can lead to volatility and uncertainty in the market. By requiring listed companies to verify and clarify market rumors, SEBI is helping to reduce the risk of market manipulation and protect investors from making uninformed investment decisions.

“The amendments to Regulation 30(11) of SEBI (LODR) Regulations, 2015 are in line with global regulations. The introduction of the requirement for top-listed companies is only a precursor to widening its applicability in the course of time,” states the note, indicating that SEBI’s decision aligns with global practices.

It’s worth noting that this principle can be traced back several decades to a 1981 edition of the New York Stock Exchange (NYSE) Manual, which has consistently demanded a “frank and explicit” response from listed companies. These regulations have remained fundamental to both the NYSE and NASDAQ rulebooks throughout the years.

In summary, SEBI’s decision to extend the timeline for verifying market rumors marks a significant juncture in India’s financial regulatory landscape, ushering in an era characterized by increased transparency and accountability among listed companies. With parallels in global regulations and a potential expansion of its scope down the road, India’s securities market is poised for a new chapter.

Background:

The Securities and Exchange Board of India (SEBI) introduced the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, commonly known as LODR Regulations, with the aim of enhancing transparency, corporate governance, and investor protection in the Indian securities market

In summary, the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, play a pivotal role in regulating the behaviour of listed companies in India, promoting transparency, and safeguarding the interests of investors in the country’s stock markets. Companies that are listed on Indian stock exchanges must adhere to these regulations to maintain their listing status.