The Securities and Exchange Board of India Chairman G N Bajpai says the Indian securities market would be a global benchmark in a few years.
New products in securities as well as interest derivatives, introduction of integrated market surveillance, development of skill of the market intermediaries, introduction of straight through processing and disclosure of important data on real time basis were some of the steps that would shape the Indian market. The moves are addition to steps already taken.
Talking to Business Standard on Tuesday evening, he said: "Over the past two years, regulations in Indian securities market have become more stringent which makes it a better place to invest in. And the effect of this is being felt," he added.
Quoting an US study, which was done in 49 countries, he said India scored 100 on disclosures. Out of 45 standards counted by the study, India has 43 in place.
However, he made it clear that Sebi would not market India abroad as "the task of the regulator was to put the regulations in place."
He said:" Sebi would rather showcase its stringent regulations and tell foreign funds to be cautious about the rules."
He expected that stringent rules and regulations would minimise risks and therefore would be able to woo investments, domestic as well as foreign.
According to him, Indian exchanges had become multi-products market with a basket of products including securities, derivatives, government securities and debts. He said Sebi was working on introduction of new products in the securities as well as interest derivatives.
The proposed straight through processing system would put an "interoperability among various intermediaries" in place and thereby would reduce risks and improve efficacy.
It would mean a system which would offer demat to demat transfer of trade eliminating the existing process which has a component of physical transfer. It is expected to be done by six months.
He also said Sebi, in consultation with RBI, would introduce T+1 cycle once the real time gross settlement (RTGS) becomes operational.
He added Sebi has tied-up with a foreign institution to set up a training institute to enhance the skill of market intermediaries. This project, he said, was expected to complete by six months.
Call auction market
Sebi was working on introduction of call auction market (CAM) on Over the Counter Exchange of India (OTCEI) to provide a trading platform to investors and brokers of the bourse. The initiative would later be introduced in other exchanges, if they wanted to.
Explaining the rationale for the move, he said OTCEI was relevant when settlement cycle was very long.
The specific advantages for the Indian stock market trading environment under the CAM includes concentrated visibility and attention on illiquid stocks.
It would possible because of segmentation of the large number of stocks that was illiquid and eligible to converted into separate category for CAM.
CAM is a form of trading that died out in the pre-computer age but was making its re-entrance in the electronic marketplace, Bajpai said.