SEBI Notifies Winding Down Policy For Depositories

The Securities and Exchange Board of India issued notification no. SEBI/ LAD-NRO/GN/2016-17/007, dated 27th May, 2016 to notify the Securities and Exchange Board of India (Depositories and Participants) (Third Amendment) Regulations, 2016. The said amendment inserts a new regulation 35B after regulation 35A of the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996. The new regulation lays down that every depository shall devise and maintain a wind-down plan in accordance with guidelines specified by the Board. The regulation further states the meaning of winddown plan as a process or plan of action employed, for transfer of the beneficial owner accounts and other operational powers of the depository to an alternative institution that would take over the operations of the depository in scenarios such as erosion of networth of the depository or its insolvency or its inability to provide critical depository operations or services.