Finance Minister emphasises need for alertness

The market regulator, the Securities and Exchange Board of India has assured swift action in case of market manipulation. At the same time, the regulator has indicated introduction of simplified Know Your Client (KYC) norms for the foreign investors.

After post-Budget meeting between the Finance Minister P. Chidambaram and regulator’s board members, the SEBI Chairman U.K. Sinha said, “We have got some data during investigations on crashes in some mid-cap stocks recently (February 25). However, we have not reached a conclusion. But we want to assure everyone that we are acting very fast whenever there are attempts for market manipulations.”

Trigger for probe

It may be recalled that even as the benchmark BSE index S&P BSE Sensex ended with gains on February 25, the mid- and small-cap indices shed over 1 per cent. The S&P BSE Midcap closed at 6,529.53 with a loss of 1.2 per cent to February 22 closing. At the same time, S&P BSE Smallcap closed at 6,475.65 with a loss of over 1.3 per cent. Some of the mid-cap stocks crashed over 65 per cent.

This prompted SEBI to initiate a probe into panic selling triggered by speculation that pledged shares are being sold by certain entities. The regulators along with the stock exchanges are looking into possible links of a rogue trader who has been barred from the capital markets but could still be trading through front entities.

KYC Norms

While talking about new KYC norms, Sinha said discussions were on and a decision is likely to be taken soon. “A committee headed by ex-Cabinet Secretary K.M. Chandrashekhar had a meeting recently and they will meet again on March 19. Accordingly we will take s decision,” he said. The new simplified norms are mainly meant to ease the process for foreign investors willing to enter India.

RGESS

The Union Budget has expanded the Rajiv Gandhi Equity Saving Scheme. Sinha informed norms for eased procedures are mainly in the domain of Government. “As far as we are concerned, we are fully ready,” he added.

The Budget proposed tax benefits on investment under the scheme by investing for three successive years, raising the eligible limit to Rs 12 lakh from Rs 10 lakh besides bringing some more mutual fund schemes.

Talking about meeting with Chidambaram, Sinha also mentioned that the Finance Minister has emphasised on the need for the regulator to be alert on various issues concerning the capital markets, including the technology related challenges.

Shishir.Sinha@thehindu.co.in

(This article was published on March 8, 2013)
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