The Hindu : Business : SEBI panel for better disclosure by market participants

Online edition of India's National Newspaper
Wednesday, Oct 06, 2004

Business

Business

SEBI panel for better disclosure by market participants

By Oommen A. Ninan

MUMBAI, OCT. 5. The Securities and Exchange Boar of India Advisory Committee on Derivatives and Market Risk Management proposed that standard surveillance techniques should be supplemented by greater disclosure by market participants such as member wise trading activity and derivative positions. However, some members of the committee expressed their reservations.

"Such disclosures to the public and market participants may spur the market at large to conduct their own analysis and help detect fraudulent and manipulative practices more efficiently,'' it stated.

Categorisation

It also recommended that foreign institutional investors (FIIs) and their sub-accounts would be categorised as pension funds, insurance companies, mutual funds, other broad based funds, proprietary funds and others based on the information submitted by FIIs during their registration with the regulator.

"This would allow the market to distinguish between different types of FII flows on the basis of their likely time horizons and the informativeness of their trades,'' the committee stated. The aggregate trading of each category of investors in cash and derivative markets may then be disclosed to the market, it added.

Stock watch alert

It also recommended to disclose the names of top ten brokers or trading members in terms of trading volumes in each security in cash and derivatives market and also to disclose the names of top ten trading members in terms of open interest in each security in the derivatives market.

This would be applicable in the proprietary trading segment too.

Further it also recommended that the stock watch alert itself should be disclosed to the market in real time in cash and derivative markets.

Fight against fraud

"It is necessary to provide the private sector with the basic information on which it can carry out its analysis, to mobilise private sector in the fight against market manipulation and fraud,'' the committee stated.

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