Lok Sabha finally okays derivative trading on SEs

NEW DELHI, November 30: Lok Sabha on Tuesday passed two major economic bills amending the definition of securities to permit trading in d...

NEW DELHI, November 30: Lok Sabha on Tuesday passed two major economic bills amending the definition of securities to permit trading in derivatives and transferring the appellate functions of government to the Securities Appellate Tribunal with finance minister Yashwant Sinha asserting these measures would ensure market regulations and protect small investors.

Replying to a discussion on both the Bills, Sinha said the measures would "facilitate market operations, regulate markets, make them deeper and equipped and protect the interests of small investors".

While the Securities Laws (Amendment) Bill 1999 included derivatives as securities in the Securities Contracts (Regulation) Act 1956 to allow trading in derivatives, the second amendment transferred appellate functions of the government to the tribunal to hear appeals against orders of adjudicating officers appointed by Securities and Exchange Board of India (SEBI).

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Allaying apprehensions by members that the twin amendments would lead to more fraudson small investors and that the capital and stock market was not ready for trading in derivatives, Sinha said "as far as derivatives are concerned we are trying to move in a very cautious and careful manner".

"We will move with extreme caution and in a limited manner on this (derivatives trading)," he said in response to fears expressed by leftist opposition members that Indian capital markets were not ready for derivatives trading.

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