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Corporate debt trading to begin soon

New Delhi, Jan. 4: The Securities and Exchange Board of India (Sebi) is preparing the modalities for trading corporate debt paper on the bourses.

Sebi chairman G. N. Bajpai said here today that the next debt products to be traded on the markets will be “debt papers — both government and corporate”.

While the government will determine the modalities for retail trading in government debt paper, the capital market will chart out the same for corporate paper.

Bajpai said the process of demutualisation of the stock exchanges would require the amendment of some Acts including the Income Tax Act, Securities Contract Regulation Act (SCRA) and the Stamp Duty Act.

He said a circular on the corporatisation of the bourses would be issued within a few days.

Bajpai added that the market regulator had set a one-year time-frame within which it wants to implement the recommendations of the Joint Parliamentary Committee (JPC) which had investigated the recent stock market scam and uncovered the market shenanigans of a cabal of brokers led by Ketan Parekh.

The report had also blamed the scam on the lack of regulatory supervision and a major systemic failure that allowed rogue brokers to ramp up shares to euphoric levels before the bubble burst.

Bajpai said Sebi has brought out a concept paper on margin trading inviting comments from the public before it goes to the advisory committee. Eventually the Sebi board will decide on it. “This is an area where we want to deal cautiously,” he said.

On the Naresh Chandra Committee report on tighter auditing regulations and enhanced corporate governance, Bajpai said, “Sebi will harmonise itself with the provisions of the report, once it is implemented.”

The Sebi chairman also said it is planning to allow simultaneous issue of IPOs and ADRs/GDR (American Depository Receipts and Global Depository Receipts). “We are considering it and have asked a task force to work on this,” he said.

While not commenting specifically on the concept of a super regulator, Bajpai said there are only two options — the first is to have a unified regulator on the lines of the one for financial services in the UK; the second is to ensure greater integration among the regulators.

Bajpai hoped that the Central Listing Authority (CLA) would be set up this fiscal. He said the rules and regulations are being formed for the functioning of the authority.

The four-member Sebi board would also be increased by the government in line with the Sebi Amendment Act, he said.

He said the Prime Minister would launch the investor education campaign on January 17 in New Delhi.

Bajpai, who was speaking on the sidelines of the All India Conference of Chartered Accountants, had said that in future the most precious word in the banking, insurance and financial service world would be the ‘integration’ of the opportunity zones to unleash values buried in their interlinkages.

In this context, he said the integration of opportunities calls for a flexible, efficient and effective supervisory regime.

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