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FM favours consolidation of stock brokers

Package soon to enhance financial literacy skills

— PHOTO: SHASHI ASHIWAL

ROPING IN SMALL INVESTORS: P. Chidambaram (right), Union Finance Minister, and Ravi Narain, Managing Director & CEO, NSEIL, at the second ANMI International Convention 2007 in Mumbai on Saturday.

MUMBAI: Union Finance Minister P. Chidambaram on Saturday urged the stock market fraternity to consider whether it was possible to incentivise consolidation of market participants.

Responding to the National Stock Exchange (NSE) CEO and Managing Director, Ravi Narain, who regretted that consolidation of broking houses had not happened so far, Mr. Chidambaram said the existence of a large number of brokers raised the cost of regulation. In their mutual interest, the Securities and Exchange Board of India (SEBI), the NSE and the Association of NSE Members of India (ANMI) should work towards consolidation of brokers.

Mr. Chidambaram was addressing the annual convention of National Stock Exchange members here.

"There are around 1,000 active brokers in the market and there are 30,000 brokers and sub-brokers and a large number of other market participants; a large number of them are inactive brokers,'' Mr. Chidamabaram said, adding that ``this raised the cost of regulation.'' Mr. Chidambaram offered full government support to strengthen the risk management system in the market in terms of safety, curbing malpractices and skill development with regards to the Indian capital market.

"I offer the support of the government in the measures pointed out by Mr. Ravi Narain,'' he said.

The Finance Minister also indicated at comprehensive amendments to the SEBI Act to launch the proposed Investor Protection Fund (IPF) and that the government would launch a package to enhance financial literacy skills.

Mumbai panel report

The Committee set up to prepare a roadmap to make Mumbai a global financial centre would submit its report in the next few days, Mr. Chidambaram said. The committee was set up after Prime Minister Manmohan Singh announced early last year that he wanted Mumbai to be turned into a global financial centre with world-class infrastructure. — PTI

Emphasising the need for Self Regulatory Organisation (SRO), he said, ``We need a well designed disclosure-based intermediary regime where SRO will be the first level of regulator and the statutory regulator will be the next level of regulation."

"There are many challenges before the stock markets, since globalisation is no more a choice, we have to live with high degree of volatility,'' Mr. Chidambaram said, adding that "we have to respond in like manner.''

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