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Move to strengthen Sebi welcome: CII

The Confederation of Indian Industry (CII) welcomed the government's intention to strengthen the provisions of the Sebi Act further with a view to ensuring investor protection.

Instituting a stronger investor protection regime necessitates the need to grant full judicial powers to Sebi, including the powers of prosecution and enforcement, a media release by the CII said on Wednesday.

There is also a need for more stringent norms for stock market intermediaries, including better disclosures as well as tighter monitoring to identify insider trading, CII added.

CII, pointing out the importance of access to information to all classes of investors, said that analysts and other privileged investors have better access to corporate information than other shareholders.

While Sebi is in the process of adopting a system based on the Edgar filings system of the Securities and Exchange Commission in the US, there is a need to implement it quickly.

These measures assume greater importance in view of the recent developments in the stock markets to ensure investor confidence and also not to dilute the sentiment boosting effect of the measures announced in the budget by the finance minister.

One of the key reform initiatives of Sebi in the past has been the restructuring of governing bodies of stock exchanges to induct public and Sebi representatives, according to CII.

However, in the backdrop of recent developments, the issue of corporatisation of stock exchanges by which ownership, management, and trading membership would be segregated from each other needs to be seriously considered.

CII said that this has been a worldwide trend with the first being the corporatisation of the Stockholm Exchange in 1993 and has been accepted as a measure to regain investor confidence and improve stock market functioning.

CII believes that the capital market will witness an upturn in the near future because of the positive economic outlook following the outstanding Budget 2001.

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