Test for market intermediaries soon

MUMBAI, Sept 7: It's going to be testing times ahead for market intermediaries with the Sebi board approving a set of recommendations for...

MUMBAI, Sept 7: It8217;s going to be testing times ahead for market intermediaries with the Sebi board approving a set of recommendations for testing of persons joining capital markets as intermediaries.

Taking the test would be voluntary for a start and made mandatory subsequently. With a view to improve investor protection through better quality intermediation, Sebi had set up a committee for certification and testing of persons joining the capital markets as intermediaries.

In its meeting on Monday, the Sebi board approved the recommendations of this committee as well as the syllabus proposed by it.

Among the recommendations of the committee are that the test may be offered on a voluntary basis in the initial period and be made a mandatory requirement after a period of two years from the date of the first test.

The examination could be taken by anyone irrespective of qualifications, age, employment or experience.

After the date on which the test becomes mandatory, every person regardless of the qualifications they possess would be required to pass the certification test within a period of 12 months from the date of employment with a capital market intermediary.

Of the existing staff with the intermediary, two persons or 20 per cent whichever is higher, shall have to obtain the certificate within 12 months from the date from which the test becomes mandatory. The intermediary that violates the minimum number of certified employees norm should be deemed to be automatically deregistered from the date of the said violation.

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Exemption from mandatory testing will be granted only to those persons who have attained the age of 50 years on the date when the test becomes mandatory and have an experience of atleast 10 years in the capital market at that time, being employed with a Sebi registered capital market intermediary.

Initially there may be a single common test for all market intermediaries and specialised tests maybe introduced for different market participants at a later date as required by the market conditions.

The tests may be conducted bi-annually at an approximate frequency of six months, said a Sebi statement.

The move to have a certification programme in place is being viewed as an important step in a country where the capital market intermediaries have very little formal knowledge about steps that they need to take to ensure that the investor is well serviced.

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Considering that investors are equally inadequately informed about there rights, it is felt that this could be a good beginning to bring in an element of formal training of market intermediaries.

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