The Hindu Business Line : SEBI plans separate system for tackling serious market offences

Mumbai March 28 The Securities and Exchange Board of India (SEBI) is planning a system to separately handle serious offences in the capital market. It is also working on regulation of investment advisors.

"We need to ensure that very serious offences in the capital market are dealt with differently from those that are numerically larger but which are not that significant or disruptive," said Mr M. Damodaran, Chairman, SEBI, at a news conference on Wednesday.

It has decided to introduce consent orders for all matters which are pending regulatory action or pending before Securities Appellate Tribunal/courts. `FAQs' will be put up shortly on the SEBI Web site on what kind of cases the system will cover, said Mr Damodaran.

The regulation of investment advisors poses complex challenges, he said. "The variety of investment advisors is mind-boggling, and there are different media through which they give advice," he added. The basic paper on this matter — to outline what is sought to be achieved — will also be put up on the Web site shortly.

SEBI has appointed a committee to look at expanding the derivatives market, said the Chairman. Headed by Prof Rammohan Rao of the International School of Business, Hyderabad, the committee will decide on what needs to be done to introduce new products and processes for more sophisticated investors.

Another surveillance committee is looking into the `Day one movement' of stocks, said Mr Damodaran. There needs to be price discovery. At the same time, stocks should not run up, he said. The committee will look at whether these two issues can be reconciled.