"After the amendment to SEBI Informal Guidance Scheme, all entities have been covered under ARA. But the ruling has no binding on SEBI," SAT presiding officer Kumar Raja Ratnam said.
Ratnam said there is need for an authority where rulings are binding on SEBI and if such an authority is created, 50 to 70 per cent of the litigations, both before SEBI and SAT, can be avoided.
Currently SEBI extends informal guidance to investors after charging Rs 25,000. But the subsequent "no action letter" stating that it would not take any responsibility on investment decisions, nullifies the guidance, he said.
With such an authority in place, a foreign or domestic investor can approach SEBI prior to investment and it would be referring to ARA panel with a ruling binding on SEBI, he said.
"ARA is necessary in Indian market as regulations are constantly changing. ARA is already there in markets like North America, Europe, Japan and Pakistan and will be in the interest on investor public to have such an authority in our securities market," he said.