The Hindu Business Line : Strong public opinion in favour of regulation, says SEBI member

More than half of a representative sample of people surveyed in India has expressed itself in favour of persisting with the current level of regulation of the stock market, if not scaling it up to the next.

Delivering his inaugural address at the 20 {+t} {+h} annual celebrations of Capstocks and Securities Ltd, a Thiruvananthapuram-based broking house, Dr K. M. Abraham, Whole-time Member of the Securities and Exchange Board of India (SEBI), said here that as much as 54 per cent supported the existing regulatory environment.

MORE, OR LESS?

A sample of 40,000 people across 27 countries was reached to for their response to the question, “Do you want more regulation or less?” Only a minority in India wanted less regulation.

What was more surprising was that in the US and the UK, 75 to 85 per cent of the people surveyed had rooted for more regulation. “We need to regulate prudently and intelligently but without stifling the market,” Dr Abraham said.

He stressed on the integrity aspect in informed regulation. If there is no integrity, it could play havoc with regulation.

“There are 8,500 registered stock brokers, 60,000 sub-brokers, 200 registrars, 250 portfolio managers, 1,700 FIIs and 5,000 sub accounts. IT is hard job for SEBI to regulate such a huge infrastructure. So there should be some sort of self-regulation coming in at some point,” Dr Abraham observed. “The first line of regulation used to start with stock exchanges, but I would say that the first line should ideally be the stock brokers,” he added.

Dr Abraham exhorted Capstocks to look at the next 10 years and recognise the challenges posed by technology. If the world processed at the speed of one lakh to three lakh transactions a second, India was going at 5,000 to 10,000.

LATENCY ISSUE

He also mentioned about the latency issue that involved the time taken for an order to be made, processed and delivered – decision latency, processing latency and execution latency.

“The first message that I would like to give is invest more in technology. The second is that always be sure that you are on the learning curve,” he said.

Recalling from SEBI's routine action-based database, he said he had got a report on Capstocks that declared that there was ‘zero omission' on the part of the company. This made for an unblemished record that the company can always be proud of, he said.

Mr V. Rajendran, Managing Director, Capstocks, retraced the humble beginnings of the company in 1989 and how it had to struggle through the initial years.

Among others who spoke were Mr P. S. Reddy, Executive Director, and Mr Sunil Alvares, Vice-President, Central Depository Services Ltd (CDSL); Mr S. Srinivasan, Director, Capstocks; and Dr S. Kevin, former Pro Vice-Chancellor, University of Kerala.

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