Sebi puts MAPIN in cold storage

The Securities and Exchange Board of India’s (Sebi) attempt to build a database of high net worth investors has been put on the back-bu...

The Securities and Exchange Board of India’s (Sebi) attempt to build a database of high net worth investors has been put on the back-burner as the regulator today extended the deadline to obtain a MAPIN certification to December 31, 2005, from March 31, 2005.

Sebi has also decided to constitute a committee to look into the coverage of MAPIN — which requires investors with transactions of Rs 1 lakh plus and all market intermediaries and their relatives to get a unique identification number that requires biometric finger printing and a photograph — which will be announced shortly, Sebi said in a statement.

Sebi’s decision to postpone the deadline follows representations it received from such investors stating in detail the difficulties faced by them.

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The proposed scheme has come in for criticism on the grounds of whether it was needed in the first place (investors already quote a PAN number), its implementation (senior citizens and physically-handicapped were finding it tought to complete the formalities), as well as how it would help the market regulator catch instances of market manipulation or insider trading.

The scheme applies to all resident investors who enter into any securities market transaction (including any transaction in units of mutual funds or collective investment schemes) of value of Rs 1 lakh plus, who were classified as “specified investors” under the relevant Sebi regulations.

Sebi notified the Sebi (Central Database of Market Participants) Regulations 2003 for creation of a central database of market participants and investors with Unique Identification Numbers to the market participants and investors.

The database was launched on November 25, 2003 by G N Bajpai, the then Chairman of Sebi.

Sebi stated intention from MAPIN is:

• Develop an inventory of market participants and investors.

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• Set up a standard for client code (unique identification number).

These regulations place a mandatory obligation on intermediaries, their employees and other entities under the jurisdiction of Sebi, listed companies and specified investors to obtain unique identification number under MAPIN database.

Sebi had warned that if these entities did not obtain the unique identification numbers by the specified date, they would not be permitted to continue their business.