The Hindu Business Line : SEBI working on regulating financial advisors

Hyderabad, Aug. 16 The Securities and Exchange Board of India (SEBI) is contemplating the creation of a self-regulatory mechanism for regulating the financial advisors.

“For a long time, we have been feeling the need for regulating financial advisors. As the problems due to unregulated financial advice is more in the securities market than in other sectors, we have taken the lead to put a system in place soon,” Mr M. Damodaram, Chairman, SEBI told newspersons here on Thursday.

At present, financial advice was being rendered by many agencies such as brokerage and media houses. “The damage can be severe if this advice is not done in a professional manner,” he said.

On the nature of the proposed regulator, the SEBI Chairman said the body should be a self regulatory organisation. “Already some brokerage and media houses have this mechanism in place. The regulation should be a model code of conduct,” he added.

SEBI had already written to other regulators for their inputs and views on the proposed regulatory body and “no time frame can be given” for its creation.

Hedge fund norms

On the regulation of hedge funds, Mr Damodaran said there was no norm in the country for registering hedge funds.

“Globally, there are many categories of hedge funds which are dealt differently in different countries. We have already regulations for Foreign Institutional Investors (FIIs) but no separate registration is needed as yet,” he explained.

Some hedge funds approached SEBI for registrations and had been told to look into FII registration norms to know their category of registration. “The FII norms are on our Web site and are open for all to see,” he said.

On the impact of sub-prime market meltdown on the US and Indian markets, Mr Damodaran said it could be one of the reasons for market corrections in India.

“Some global investors could pull out funds from our markets to increase liquidity in the US market. There could be some correction, but it would be a manageable one. Our markets continue to be safe,” he explained.

SEBI would be setting up a training institute in the outskirts of Mumbai. “We will soon give a detailed press release on that,” he said and refused to give further details.

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