SEBI (Depositories and Participants) Regulations, 2018
The Securities and Exchange Board of India (“SEBI”) regulates the securities market in India, ensuring market integrity, investor protection, efficiency, transparency, risk management, market development, compliance, and enforcement. Earlier, settlement of transactions in the securities markets was based on the physical movement of certificates, which caused delays, bottlenecks, increased transaction costs and created risks for market participants. To tackle this issue, the Depositories Ordinance 1995 was passed on September 20, 1995, allowing for the dematerialization of securities, thereby reducing the risks associated with physical record-keeping and the transfer of shares. Subsequently, the Depositories Act, 1996, was passed on August 10, 1996, and the said Act was deemed to have come into force on September 20, 1995. In exercise of the powers under section 30 of the Securities and Exchange Board of India Act, 1992 (SEBI Act) read with Section 25 of the Depositories Ordinance, 1996 (which was subsequently repealed by the Depositories Act, 1996), the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996 were enacted, which inter alia provided for matters related to registration of a depository and depository participant, rights and obligations of the depository, the depository participant, the issuer, the manner of surrender of a certificate of security, the creation of a pledge or hypothecation, etc. The aforesaid Regulations were subsequently replaced by the Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018 (“DP Regulations”), which came into effect on October 3, 2018, and included provisions inter alia related to ownership norms in a depository and governance of a depository. This article provides an overview of the evolution of regulations governing depositories and participants and the significant/key changes/amendments made over the years.
