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Depositories, SEs question Sebi plan to make them disclose accounts

NetScribes/Janaki Krishnan

Market intermediaries are sceptical about a Securities and Exchange Board of India (Sebi) proposal to make it mandatory for them to disclose their annual accounts. The proposed move is aimed at promoting transparency in the capital markets.

The general feeling is that while the annual accounts of depositories are available with the Registrar of Companies (RoC), those of the stock exchanges might be of no interest to the public as they are not shareholders in the exchanges.

Sebi is reported to have discussed the issue of such disclosures at an internal meeting with its senior officials.

CB Bhave, managing director of National Securities Depository Ltd (NSDL), said that he failed to see the point of the whole exercise. "We send Sebi 7-8 copies of our balance-sheets, which it can put on its website whenever it wishes," he said, adding that the market regulator has not yet sounded him out on this transparency drive.

Both NSDL and Central Depositories Services Ltd (CDSL) are registered under the Companies' Act and are legally bound to furnish their financial statements to the RoC. Once such information is passed onto the RoC, it becomes a public document accessible to the investing public.

"We also send copies of our accounts to depository participants," said Bhave. There are about 150 DPs, including 10 stock exchanges. "I think there is enough transparency in our functioning with all the people concerned getting the required information."

Stock exchanges also furnish their accounts to Sebi. In fact, in this case, auditing takes place not only at the level of the exchanges but also at Sebi's level.

ML Soneji, vice-president of the National Stock Exchange (NSE), said one should consider whether ordinary investors would be interested in the financials of stock exchanges. "Sponsors of exchanges or member brokers are anyway privy to all the information. Sebi, the market regulator, is also kept informed. What more does Sebi want?"

Exchange officials said that the only information that could possibly interest investors would be the size of the Investor Protection Fund and even this information is furnished to Sebi on a periodic basis by the stock exchanges.

With the exception of BSE, which is a non-profit organisation, all other exchanges in the country are profit-making entities.

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