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SEBI chief: investor protection leads to market development

Special Correspondent

Says investor protection is a continuous journey


‘Changes taking place in mutual fund industry'

Says ASBA has been helpful to investors


KOCHI: Securities and Exchange Board of India (SEBI) had been taking steps to protect interests of the investors that would indirectly lead to market development, said SEBI chairman C.B. Bhave here on Tuesday.

He was addressing a seminar on ‘Investor protection and market development', organised by the Ernakulam branch of the Institution of Chartered Accountants of India.

He said a transformation was taking place in the mutual fund industry. The asset management companies needed to adjust to the new environment. Mutual fund equity schemes garnered Rs.63,000 crore between August 1, 2009 and July 31, 2010. The market seemed to be worried about the Rs.10,000 crore redeemed in excess of the arrivals during the period, perhaps forgetting that the investment itself was substantial.

The market should be fully analysed before arriving at conclusions. The number of new schemes had come down and it was a good development, he said.

“Even while the industry says that the collections have come down, it should be noted that during the last three years, Rs.60,000 crore has been collected in the existing schemes. The profit made by asset management companies has gone up from Rs.240 crore in 2008-09 to Rs.870 crore in 2009-10. It is a win-win situation for all,” he added.

He said ASBA (application supported by blocked amount), an initiative taken by SEBI, had been of much help to investors.

“The application contains an authorisation to block the application money in the bank account, for subscribing to an issue. If an investor is applying through ASBA, his application money shall be debited from the bank account only if the application is selected for allotment after the basis of allotment is finalised,” he said.

Currency options

He said SEBI, in coordination with the Reserve Bank of India, had evolved a mechanism to launch currency options. It would contribute to the development of the secondary market. The regulator had also brought parity between institutional and non-institutional investors in respect of cash segment in the secondary market, despite resistance from institutional investors.

Western markets had failed to prove their efficacy. Every concept was being tested now. Investor protection was a continuous journey and a lot more was required to be done, he added.

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