With effect from January 16, 2014, Ministry of Finance had amended the Securities Contract Regulations Rules 1957 allowing all insurance companies to become member of SEBI approved stock exchanges.
In a circular dated 10th July 2014, industry regulator Insurance Regulatory and Development Authority (IRDA) issued a circular allowing insurance companies to become a proprietary trading member of a Security Exchange Board of India (SEBI) approved stock exchange for carrying out trades in the debt segment.
In this regard the insurance companies are required to comply with the following conditions:-
Insurer needs to ensure compliance of all Regulations and guidelines prescribed by SEBI and other regulatory agencies as amended from time to time in this regard.
Operations pertaining to Membership for Corporate Bond segment in SEBI approved Stock Exchanges for undertaking their proprietary trades should facilitate separate monitoring of such trading transactions by maintaining separate Bank and Demat accounts.
Insurers are required to note that any penalties arising out of such membership shall not be debited to Policyholder’s account.
Concurrent auditor has to comment on non-compliance, if any, arising out of membership of stock exchange for proprietary trading in his quarterly audit report.
The decision to obtain Membership shall be taken by Board of Directors.Further, the revised guidelines also state that insurance companies cannot debit any penalties arising out of such membership to the policyholders account .
