The Hindu Business Line : Communication gap

THE INVESTING COMMUNITY in the country could have done without the ongoing controversy involving dissemination of the orders of the Securities Appellate Tribunal. The Securities and Exchange Board of India has suspended posting of these orders since January. What is intriguing is that while SEBI contends that it has been verbally informed by the Tribunal to suspend posting of fresh orders, the latter not only denies issuing any such directive but goes on to add that the regulator does not need any permission, oral or otherwise, to publish the orders of the Tribunal. But the issue is really not one of a gap in communication between two vital institutions of market regulation, though regrettable in itself.

The rulings of the Tribunal deal with such aspects as a market intermediary's right to carry on business, the freedom of companies to access the capital market, the circumstances that trigger an open offer for purchase of shares in a target company, and so on — matters that are of considerable public importance. Further, such rulings lay down precedents that serve as signposts to market participants in guiding their future conduct. It would, therefore, be in the larger interest of orderly conduct of trading in the stock market if the Tribunal's rulings are publicised in the widest manner possible. While the logic of posting the Tribunal orders on SEBI's Web site is unexceptionable, the regulator has to contend with the fact that the Tribunal inherently has the power under law to declare what orders shall be released for publication. If the Tribunal has restricted SEBI from posting these orders on its Web site, as the latter claims, the regulator cannot go against such a directive, either. Equally, it can be nobody's case that all the 100-odd cases that have been decided in the interim are bereft of any public interest and, hence, deemed not fit for publication. The onus, therefore, clearly lies with SEBI. It must take the initiative and sort out the issue with the Tribunal so that the public continues to have access to the rulings of the appellate body. If that fails, it must seek the Government's help in modifying the rules of procedure that confer on the Tribunal the discretion to decide on publication of its orders.

In any case, such a feature is incompatible with the current emphasis on greater openness in the functioning of society. Tribunals hold a critical position in the liberalised scheme of things for the economy. If the goal of getting the government off the back of the industry — the key ingredient of the new economic policy framework — is to be achieved, the supporting institutional mechanisms, such as autonomous regulatory bodies and appellate authorities, must not only function effectively but, more important, should be seen by the public to be doing so. The sooner this controversy is ended the better it is for the well-being of the country's capital market.

More Stories on : Editorial | Regulatory Bodies & Rulings

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Communication gap

Farming in US and India — The ground reality on subsidies

We've no faith in the World Bank but it is betting much on faith

Salaried are not the favourites

A largesse for deep-pockets

Blowing hot and cold on cold-rolled product

Shouldn't reforms be in better form?

Sticklish issues