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Stock market regulator’s SEBI’s plans to regulate investment advisors could get tougher due to availability of manpower, feel market experts.
“SEBI has to process 40,000-50,000 applications from advisors seeking registration and it is cumbersome,” a market intermediary said.
SEBI had exempted intermediaries such as insurance and pension agents, lawyers, CAs, brokers, sub-brokers, PMS providers and merchant bankers from registering as investment advisors.
SEBI had also allowed persons to give general comments in good faith on trends without being specific on securities and products.
These decisions were part of SEBI board meeting on August 16.
Divergent views
Traders said that nobody wants to become a self-regulatory organisation (SRO) as present regulations are onerous.
“If trade body becomes an SRO, the chances of interest of the smaller players being taken care of are less. It could lead to ‘groupism’ among the constituents of the trade body,” said a senior executive of a fund house.
The mutual fund trade body AMFI, however, disagrees with this view.
“AMFI has in-principle agreed to play the role of an SRO. We are awaiting various details associated to this function from SEBI,” said Mr V. Ramesh, Deputy Chief Executive, AMFI.
Subsidiary opening
Market experts said that trade bodies will have to float a subsidiary to take up the role of an SRO.
The SRO’s board should have independent directors and regulator-nominated directors in majority.
Failing this, it would amount to conflict of interest as trade bodies are expected to talk on behalf of the trade and would not be able to discharge the regulator’s function effectively.
There is also lack of clarity on whether SROs are required to have their own vigilance and inspection departments.
Experts felt merchant banker’s association would not become an SRO as it would mean duplication. “Why should Association of Investment Bankers of India regulate the brokers who are already regulated by SEBI and also have brokers’ trade bodies with various exchanges,” questioned a senior merchant banker.
raghavendrarao.k@thehindu.co.in
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