FISE moots insurance cover

MUMBAI, May 18: The Federation of Indian Stock Exchanges has proposed the formation of a deposit insurance scheme for the protection of investors in the capital market. In its pre-budget memorandum , FISE has proposed the establishment of a single window institution for the protection of the investors on the lines of the Securities Investor Protection Corporation which protects the interest of investors in the USA and guarantees a payment upto US 5 lakh to an investor in case he sustains a loss due to default of a broker upto this amount. Other than this, FISE has proposed a special type of court like quot;Securities Market Tribunalquot; having an exclusive jurisdiction over all security market related disputes. On dematerialisation, it has proposed subsidising the operations for at least three years so as to popularise the depository mode.

FISE has also suggested an amendment in the definition of speculative business under the Income Tax Act 1961. It has also proposed the exemption of customer protection fundsand of stock exchanges from payment of income tax under section 10 of Income-Tax Act 1961.

On the initial public offer, it has suggested a safety net in respect of all public offerings to be honoured by promoters, merchant bankers and underwriters. The book building exercise should be confined to not more than 25 of the issue and the remaining shares may be offered to the public through prospectus at 15-20 below the book-building price. The Federation has also suggested raising the 25 percentage benchmark of the public offer for entitlement for listing to 40 .