Jaitley to SEBI: attract more retail investors

Finance Minister Arun Jaitley on Sunday asked SEBI to enhance retail investor participation in capital markets.

In his first customary address at the post Budget meeting of the SEBI board, Jaitley asked the capital market regulator to adopt greater transparency in its functioning in the back drop of the Financial Sector Legislative Reforms Commission’s (FSLRC) recommendations.

He was also keen that all regulators adopt greater transparency.

Key messages Though Jaitley did not take questions from the media, SEBI Chairman UK Sinha later said that two-three important messages were given by the Finance Minister.

The Finance Minister was keen that SEBI should take measures to attract retail investors to the market, said Sinha, adding that issues such as investor awareness were discussed.

Retail cap Currently, there is reservation for retail investor in the public offerings of shares.

In an IPO (Initial Public Offering) and a FPO (Follow-on-Public Offer), a minimum of 35 per cent of shares on offer are reserved for retail investors – those who can invest up to ₹2 lakh. Similarly, in offer for sale through stock exchanges (OFS) or auction method, there is minimum reservation of 10 per cent for retail investors.

The Finance Minister also discussed the FSLRC’s recommendations with the Board. On legislative measures suggested in the FSLRC report, Sinha said that his understanding was that the Government would have more consultations before taking any decision.

Push for transparency Asked about the non-legislative FSLRC recommendations, Sinha said, the Finance Minister is of the view that “all regulators should work towards more transparency in regulation-drafting”.

FSLRC submitted its report last year where it talked about a unified regulator besides other issues.

However, there are differences among regulators on the issues.

5 regulators Currently, there are five main regulators in the financial sector – SEBI for the capital market, RBI for the banking sector, IRDA for the insurance sector, PFRDA for the pension sector and FMC for the commodity futures segment.

The Government has already said that some of the FSLRC recommendations require legislative changes while for others, work will start soon.