Different Strokes

Who regulates trading in gilts?SEBI's circular last week, which banned negotiated deals, has perplexed debt traders. It says: As govern...

Who regulates trading in gilts?

SEBI8217;s circular last week, which banned negotiated deals, has perplexed debt traders. It says: 8220;As government debt securities and money market instruments are under the regulatory jurisdiction of the RBI and do not fall under SEBI, the circular regarding negotiated deals does not apply to them8221;. The SEBI chief corroborates this; he says if government doesn8217;t consult SEBI while issuing securities how can SEBI be responsible for their secondary market trades? These trades account for a huge volume of over Rs 2,000 crore these days, so who regulates them? Brokers say that their contracts for trades in government securities, Certificates of Deposit or Commercial Paper are issued under the Securities Contracts Regulation Act, whose powers have all been delegated to SEBI and not to the RBI. The RBI, they say, is not responsible for trading government securities. Wouldn8217;t that make brokers free from all regulation? Not entirely. The regulatory supervision of the boursescontinues. What8217;s most surprising is that only seven years ago, the Rs 5,000 crore securities scam in 1992 was concentrated mainly around the shenanigans of brokers and bankers in the government securities and money markets.

Reliance has the last laugh

One company that is truly amused about the rate war that has started between the NSDL and to-be-launched Central Depository of Securities is Reliance Industries. Just the threat of CDSL has caused NSDL to drop its rates dramatically. Two years ago, NSDL had offered companies an opportunity to pay a one-time fee of seven bases points on outstanding market capitalisation so that their investors would not have to pay the depository. When Reliance was approached, it haggled for a reduction in the fee from seven bases points to four. NSDL refused saying it could not afford the lower amount and that was the end of the matter. As a company with a really high market cap Reliance may have seemed investor-unfriendly then, but it seems to have saved itself afat fee. It is now having the last laugh because NSDL has decided to drop the fee for investors to non-existence. NSDL could indeed argue that a dozen other companies paid up the one-time fee at seven bases points, but had it been more accommodating, it would have collected more from Reliance alone. Reliance has certainly emerged shrewder and the moral of the story is that competition is always good for the investor.

ICICI8217;s capital and brokerage

When it comes to selling a public issue, there is no difference between a public FI and an owner-managed company. ICICI, whose Rs 275-crore public issue is now open for subscription is openly offering a 1 per cent incentive read kickback on subscriptions. ICICI Capital Services Ltd make the offer co-ordinator for ICICI. So far, the offer has gone out to ICICI shareholders who 8220;share a close association with ICICI8221;.

HLL8217;s natural route

Fifty years after Independence, HLL seems on the verge of discovering a new business opportunity intraditional ayurvedic beauty products. A low key test market of these products is currently on under the Pears Naturals brand name. And it seems set to shake the premium ayurvedic products8217; market. The Pears Naturals products are as simple as besan and milk; backed by HLL8217;s research inputs they are attractively priced and smartly packed. It seems to us that HLL is once again moving the market downwards.

Watch for the i8217;s and the t8217;s

Car manufacturers who want some name recognition better do something about keeping those i8217;s dotted and the t8217;s crossed. Ford Motor Company may have built its reputation on it Model T, but the Ford Escort in India, seems to find it difficult to hang on to the T8217;s8217; in the name tag. It8217;s the same with the Indica8217;s I. Indica has more reason to worry, since it looks like the Palio. For want of some glue, the brand mustn8217;t be lost.

Author8217;s email: suchetadalalyahoo.com