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Journalism of Courage
The Securities and Exchange Board of India (Sebi) will come out with the draft guidelines for plantation companies by the last week of December. Disclosing this the Sebi chairman D R Mehta said that till the new regulations come into effect no new schemes would be allowed. Similarly existing schemes will not be allowed to raise money unless they have a credit rating. The regulator has earmarked a sum of Rs 4 crore as budget for collective investment scheme advertisements through which it publishes the ratings of various companies.
All the 610 plantation companies identified so far will now have furnish to the Delhi high court details about money raised, directors, assets etc, he added. If they fail to do so they will face action as it would be contempt of court.
With regard to companies who floated premium issues and subsequently disappeared, Mehta said Sebi has conducted a detailed study of the four years between 1992-96 and identified 69 companies. “We have written to the Department of Company Affairs to take adequate action against these firms. We expect to complete the study for the remaining two years soon. Punitive measures like debarring these companies from the market are being thought of,” added he.
The Sebi chairman also ruled out suggestions from some Bangalore Stock Exchange (BgSE) members of doing away with twin capital adequacy norms once the Inter-Connected Stock Exchange comes into being. “There will be no change in the capital adequacy norms prescribed,” he categorically said while inaugurating the demat trading at BgSE.
The capital market watchdog was exploring the possibilities of reducing the settlement cycles from the existing seven days to five days. As far as demat trading is concerned by April 5 next year 75 per cent of the business will be in demat form. “Our expectations are that in the next two years the entire securities business in India will be in demat form . Systematic capital market changes like switch-over to demat mode will redress investor complaints to a large extent, opined Mehta.
Once the required amendments to the Securities Contract Regulation Act is made in the parliament, derivatives trading will commence. Corporate governance is another major issue that is plaguing the market and the appointment of compliance officers is a beginning, he added.
Refuting charges that the regulator was moving the market, he said that Sebi is only a regulatory body. It cannot move the market up or down and if it does it is illegal. It can only ensure that the market is safe for investors.
Bourses should also endeavour to explore niche areas and set up terminals there. The ICSE is an opportunity for small SEs to get together and prove a challenge to BSE and NSE. “This will lead to some restructuring and only the fittest bourses will survive. Rendering efficient service to small investors should be the buzzword for SEs,” he said.
Despite the present dismal conditions in the entire South East Asian region India and Taiwan are considered to be the most stable markets. “Volatility in markets is an effect of globalisation and markets should be able to adapt to it,” said he.
