The Hindu Business Line : SEBI keeping an eye on bull-run

WITH the stock markets touching the highest levels in the last couple of years, the market regulator Securities and Exchange Board of India (SEBI) is now on a `high alert' and is prepared to deal with any unusual movement in the market.

"We are on a high alert. And we are proving by every action," the SEBI Chairman, Mr G.N. Bajpai, told presspersons here on Saturday, on the sidelines of the convocation ceremony of the Institute of Chartered Financial Analysts of India (ICFAI) University.

He said the regulator has taken a number of proactive steps. "We have brought down the circuit filters, raised the level of margins, transferred the companies from the regulator rolling settlement cycle to trade-for-trade and even initiated investigations into some cases."

Allaying apprehensions on the current bull-run's dependency on the FII funds and hedge funds, Mr Bajpai said, "Roughly about 25 per cent of the funds are coming from FIIs. This comes through what is called participatory note route. Hedge funds cannot come directly. They come through participatory note route. Within that FII funds, the share of hedge funds is only 20 per cent. You can assess the size of hedge funds. It is 20 per cent of the 25 per cent. We are on a disclosure-based regime. We have disclosed these figures to the market. Let market assess what is the extent of risk."

On the poor flows of portfolio funds of mutual funds into the Indian securities market, he said: "Once the managers of the Indian economy chose that we can have portfolio investments flowing into the securities market, that is a policy decision. It is up to the policy managers to once again take a view what they should be doing. So far as I am concerned, I look at the movements of the market - whether there is usual or unusual movement. If there is any unusual movement, I will take care of it."

Responding to the apprehensions that the promoters of a number of companies were resorting to unhealthy practice of offloading their stakes at high prices in the current bull-run and subscribing to the preferential offers at low prices, the SEBI Chairman said, "We have already put a stop to this practice temporarily. Fresh guidelines are expected on the matter shortly, mostly in a month or so. The recommendations of the primary market committee on the subject of preferential offers to promoters were already announced. We are awaiting the public response to these recommendations and we will finalise the norms shortly. The committee has suggested a six-month freeze on promoters selling their holdings either before or after the preferential offers."

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