According to people privy to the matter, the regulator is considering a mechanism through which it would send its basic findings to the entity under scrutiny, by way of a basic notice, before issuing a formal enforcement showcause notice. The basic notice will ask if the entity wishes to settle the proceedings through the consent mechanism.

A plan to this effect is likely to be discussed at a meeting of the Sebi board here on Wednesday.

“By way of this notice, we will let the parties know that they can approach us for settlement of the matter by way of consent,” said an official.

The basic intimation notice with respect to enforcement would be delivered to the parties concerned after approval from a Sebi whole-time member. The parties would then have to approach the regulator within 60 days to settle enforcement proceedings, said sources.

A consent order allows an entity prima facie found to be violating securities laws to settle proceedings with the regulator. This settlement is done without accepting or denying the charges. As part of the current practice, a settlement of civil proceedings begins after the issue of a showcause notice, as parties become aware of probable action only after that.

The markets regulator’s likely move could be meant to save on cost and time. “The issue of a basic notice will reduce the cost incurred by Sebi, and also save time,” said a source.

After a showcause notice is issued and the reply filed by the entity concerned is examined, a personal hearing takes place. After that, a final order is prepared. Any order — consent, or for dropping of charges, or a final one — is generally put by Sebi in the public domain. Some fear that these matters, if disposed of at the preliminary stage, would not be put in the public domain and, thereby, make such proceedings less transparent.

"The order may not come in the public domain, if the matter has been settled before enforcement proceedings," said a market participant.

However, the practice of sending basic notices has global precedence. The US markets, for example, follow a similar practice that is referred to as the 'Wells notice' (named after the 1972 Wells Committee that had proposed the mechanism)."A Wells notice is issued by the Securities and Exchange Commission in the US, before the authorisation of enforcement proceedings. However, SEC has decided against adoption of a formal requirement of sending such a notice. If it issues a Wells notice, it is required to commence enforcement proceedings (if any) within 180 days. The issue of whether or not a company receiving a Wells notice should have to disclose it in its public filings is being debated," said Vanessa Abhishek, a Bombay High Court lawyer.

Legal experts believe that Sebi, while implementing the new mechanism in enforcement proceedings, should ensure companies make the right disclosures to the public. "The issue of a Well notice before the issue of a formal showcause notice might not lead to an additional level of non-transparency. The intent, I believe, is to avoid any loss of reputation to companies at a prima facie stage," said Sandeep Parekh, founder of Finsec Law Advisors.

"If an entity to which the Wells notice has been sent is inclined to undertake the consent route, it could proceed in advance. That might expedite the outcome and also assist Sebi in spending that much less time and resources," said Tejesh Chitlangi, equity partner at IC Legal.

Others said that the move might have its own risks. "The regulator should ensure the parties do not end up using the Wells notice as a delaying tactic and prolong the enforcement proceedings," said a market participant. An email sent to the regulator on Monday did not elicit any response.