Sebi evolving in tune with market needs: Arun Jaitley

New Delhi: Emphasising that Indian securities market has seen significant developments, Finance Minister Arun Jaitley on Saturday said the regulator is evolving in accordance with the needs of the economy and markets.

Discussing the Budget initiatives with the Sebi board here today, Jaitley said regulations have been evolving very fast and that the regulator as an institution has established lot of credibility for itself.

The future agenda for the capital markets regulatory body, including evolving technological and policy changes, was also discussed, he told reporters after addressing Sebi board and top officials at the customary post-Budget meeting.

Sebi Chairman U K Sinha said the Finance Minister was informed about the developments in the market as well as current issues Sebi and market are facing.

"We had a very healthy discussion on that ... We discussed various items for implementation post Budget announcement," he added.

Jaitley said Sebi is a professional organisation with a considerable experience in this line and has been evolving as per the needs of the economy and the markets itself.

"Primarily, we discussed issues relating to markets ... subjects related to future agenda, some of which are Sebi's own agenda because of various evolutions in markets and technologies and some of which are necessitated by Budget announcements.

"It is those subjects which we have discussed at the meeting today," he noted.

According to a release issued by Sebi, the Finance Minister remarked that the Indian securities market has witnessed very significant developments in the last 5-6 years, particularly in the context of technology heavily influencing the market operations accompanied with increase in the size of markets.

Jaitley also complimented Sebi and observed that Sebi, as an institution has established lot of credibility for itself, the release said.

During the interaction, various reforms and regulations, including in the areas of ease of doing business, governance, corporate bond market, exit of regional exchanges and high frequency trading were touched upon.

"Need for further development of commodity markets in both the spot and derivatives segments and the recent Union Budget proposal to look into integrating the two segments were also highlighted during the discussion," the release said.

Minister of State for Finance Arjun Ram Meghwal, Economic Affairs Secretary Shaktikanta Das, Chief Economic Advisor Arvind Subramanian and Sebi Chairman-designate Ajay Tyagi, who is currently an Additional Secretary in the Finance Ministry, was also present. 

At the time of merger, Sebi had sought clarification from the Finance Ministry with regard to its jurisdiction vis-a-vis NSEL matters and was told that Sebi will support the three- member committee set up by the Bombay High Court for effective recovery of investments from the defaulters of NSEL.

The Finance Ministry also asked Sebi to ensure its representation in the meetings held for reviewing the progress in NSEL issue.

At the same time, the Ministry also clarified that since spot markets and ready delivery contracts were not being regulated by FMC, Sebi was also not expected to take upon itself any regulatory function with regard to such markets.

After Sebi took over regulation of commodity derivatives market, it has been receiving large number of representations from various organisations including NSEL Investors Action Group, NSEL Investors Forum and also from NSEL, seeking intervention including in recovery of dues from defaulters.

Sebi has also been required to act against NSEL brokers for various alleged irregularities and to apply Sebi regulations on CIS and Ponzi schemes with regard to trading at NSEL.

However, Sebi has clarified its position that it has no role to play in recovery from the defaulters of NSEL and the same was being dealt with by other agencies such as EOW and ED and also a high-powered committee set up by the court.

Sebi has also informed the Committee that the recovery matters pertaining to NSEL was were beyond Sebi's regulatory domain.

On action against brokers, Sebi looked into their role on the basis of the preliminary report of EOW which contained prima facie evidence of wrongdoings by some brokers.

Sebi set up an Internal Committee to examine the role of brokers and subsequently appointed auditors to conduct audit of books of accounts of five commodity derivative brokers whose name appeared in the interim report of EOW.

On the basis of auditors' report, Sebi initiated enquiry proceedings against these five brokers -- Anand Rathi Commodities Ltd, Geofin Comtrade Ltd, India Infoline Commodities Ltd, Motilal Oswal Commodities Brokers Pvt Ltd and Philip Commodities India Pvt Ltd.

Sebi also appointed a bench of Designated Authorities and they issued show cause notices in this matter. Besides, enquiry proceedings were initiated against the entities which are under the same management control of four brokers -- Anand Rathi Commodities Ltd, India Infoline Commodities Ltd, Motilal Oswal Commodities Brokers Pvt Ltd and Philip Commodities India Pvt Ltd.

Sebi has been attending the review meeting to oversee the action taken on recommendation of the Special Team of Secretaries on NSEL matter and has been apprising the committee of the action taken by it and the status thereon.