SEBI clears internet equity trading

quot;Without amending the cyberlaws, one could go ahead with this system,quot; he said after a meeting of the SEBI board in New Delhi. Internet trading will allow routing of client orders through a broker8217;s filter via the net to the exchange8217;s mainframe trading system. The broker will take complete responsibility for the trades.

BROKERS READY: Limited use of the Internet for stock trading has already been in place for some time with some brokers taking orders from clients via E-mail. The National Stock Exchange is ready to permit Internet trading, having opened up its software front-end to allow other software vendors to provide interconnectivity with brokers8217; systems. The Bombay Stock Exchange will be ready by mid-March.

Nearly a dozen broking outfits are in advanced stages of preparation for introducing e-broking in the country. ICICI Ltd has launched an integrated internet based service which allows its customers to place orders for shares over the internet, make payments for them online and hold them in dematerialised form. Investsmart India Ltd, an initiative of Infrastructure Leasing amp; Financial Services ILamp;FS has already announced that it is geared to commence internet trading. 8220;The objective of initiating internet trading is to allow quick and easy access to valuable research and information to an investor and enable him to execute transactions faster and more efficiently, as also to provide transparency in investment dealings,8221; said an ILamp;FS official.

Stock Holding Corporation of India SHCIL has launched a software product that would allow investors to conduct all stock market operations including cash payments through the internet. The product named Stockdirect8217; and launched by SHCIL along with State Bank of Patiala SBP, would bring the investor8217;s bank, broker, stock exchange and depository participants under one roof, said SHCIL managing director and CEO B Virupaksha Goud.

Marketmen expect at least 25-30 per cent of share deals to be routed through internet. 8220;I expect a rise in business volume once internet trading kicks off. This has happened in the US where broking firms like Charles Schwab have made their mark. Much will also depend on the cyber laws being put up in the Parliament,8221; said a dealer of the National Stock Exchange.

Apart from ICICI and ILamp;FS, others like SSKI, Motilal Oswal, Sykes and Ray, UTI Securities, Sunidhi Consultants, Ask Finance and Prime Broking are getting ready to start internet trading shortly. SEBI has asked the stock exchanges to test their systems. Not to be left behind in the race, at least one dozen more brokers and institutions are also planning internet trading.

Mehta also said high networth individuals and corporates could invest in Indian equity markets provided their combined investments did not exceed five per cent of the company8217;s equity. 8220;High networth individuals and corporates abroad can invest in India through FIIs foreign institutional investors subject to a cap of five percent in the company8217;s equity,quot; he said.

BIRLA PROPOSALS ACCEPTED: The SEBI chairman also said board had accepted report on a code of corporate governance. quot;The Kumaramangalam Birla committee report on corporate governance was accepted in toto. The corporate governance code will be applicable to A category scrips in which forward trading is allowed from March 31, 2001,quot; he said.

Other scrips will be taken up later within a three-year time frame, he added. SEBI had also approved the report of the committee on venture capital. quot;The venture capital committee report was also accepted in principle,quot; Mehta said.

MARKET SAFE: After a review of the capital markets, Mehta said they were safe and there was no cause for concern. quot;Markets are safe8230;, we have asked all exchanges to keep a close watch,quot; he added. quot;The stock markets are safe and the stock exchanges are collecting daily margins of an average Rs 5,500 crore,quot; he said.

With the stock exchanges collecting these kind of high margins, the possibility of default by brokers was very minimal, he said. Asked whether some of the companies stocks were under Sebi watch list following the sudden spurt in their prices, Mehta said quot;we keep a regular watch on the stock prices and if there is some uneven movement in their prices, SEBI keeps a regular checkquot;.