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Our Bureau

Mumbai , June 28

THE SEBI-appointed MAPIN committee has recommended against finger printing of market participants.

The report of the committee, chaired by Mr Jagdish Capoor, former Deputy Governor, Reserve Bank of India, released on Tuesday, suggested a new software system, called `dedupe', which will issue unique numbers to each participant without having to use biometric systems.

Investors who have already availed themselves of their unique identification numbers (UIN, also referred to as MAPIN) will now have to provide further information to make the existing database compatible with the proposed one, according to the report.

A new application form will be sent to all existing MAPIN holders to obtain information on additional fields.

The report has suggested the discontinuance of fresh registrations under the current format. So far, three lakh UINs have been issued.

The five-member committee had several rounds of discussions and invited public suggestions before filing the report.

Mr C.B. Bhave, Chairman and Managing Director, National Securities Depository Ltd, even resigned from the committee on May 24. Informed sources say this was over disagreements over the system's future. The final report is not signed by him.

The suggestion to scrap the biometric system was despite the fact that several software companies that were invited to make a presentation to the committee had asserted that this system was the most unique.

Also, for the proposed system to be effective, the requirement of information parameters is very high.

Explaining the reasons for doing away with the biometric system, the report says the key objective of biometrics in the existing system is to arrive at uniqueness, and there is no proposal to use biometrics to enable a trade. (This will involve capturing transactions in the capital market through biometrics, entailing the necessity of all investors having physical access to a trading system).

The report recommends that investors will have to fill up an updation form every six months, barring which trading will be disenabled.

Though the report does not specify the cost of the new system, it estimates that it shall be significantly lower than that in the current system.

"Since the main objective of MAPIN is regulation and creation of a single database of investors, issuers and intermediaries, the committee is of the view that SEBI could consider bearing the cost. However, if necessary, a very nominal fee may be levied on the applicant," the report says.

The committee also suggests that heavy penalty should be levied on investors who make false disclosures. Investors also bear the onus of informing about any changes in the information provided, as and when they occur.

The new MAPIN will continue to ask for disclosures on relatives, as the committee believes many manipulative trades are done through relatives and associates. However, disclosures have to be made only of relatives and associates who already have their MAPIN, on the date of application.

New MAPIN forms and updation forms will be distributed through depository participants.

A phased approach of implementation is suggested. In the first phase, domestic investors in debt, equity and derivative markets will be covered, followed by investors in mutual funds, intermediaries and foreign institutional investors.

Investors who do not obtain their UIN before the deadline will not be allowed to trade. Existing investors who miss the deadline have to pay a penalty, suggests the report.

New investors have to fill up their MAPIN forms at the time of opening an account with the depository participant.

The report has now been put up for public comments.

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