New Delhi, Nov 27: The Lok Sabha today passed the Securities and Exchange Board of India (Amendment) Bill, 2002, which will give the market regulator greater powers to deal with market shysters and help restore investor confidence in a market that has been on a downhill course for over 15 months.
The government today assured the House that it would “emphatically” promote demutualisation of trading to prevent abuse of the market by brokers and traders.
Finance minister Jaswant Singh told the Lower House of Parliament, the Bill would be “a step in the right direction” to restore small investors’ confidence and that it would redefine offences like insider trading, fraudulent and manipulating trade practices and market manipulation.
“The revival of capital markets would be through three modes: restoration of investors’ confidence, development of market and fiscal steps to promote sentiments of investors,” Singh said.
The country’s growing small investor base which had invested their hard-earned savings in the country's capital market had their wealth eroded due to a series of capital market scams in the early 90's to the recent past.
Cutting across party lines, members supported the Bill aimed at increasing the number of members from six to nine besides conferring power to Sebi to summon persons or institutions, suspending trading of any security at any exchange, prohibiting insider trading and manipulative and deceptive devices and also enhancing the penalties under the original Act.
The government was, however, severely criticised for bringing in an Ordinance instead of directly coming to Parliament with the legislation which prompted Singh to assure that necessary changes would be made in Sebi or other laws on the basis of the recommendations of the Joint Parliamentary Committee probing the stock scam.
He said the government took recourse to the Ordinance due to urgency of the situation and it was not intended to bypass and disrespect Parliament or standing committee but suggested that working of the standing committees be improved to cut down the time taken by these.
The government had introduced the amendment to the Sebi Act of 1992, cleared last month by the Cabinet, in a move to arm the market regulator with wide ranging stock market policing and penal powers.
Under the present Sebi Act 1992, the regulator can conduct inspection of listed companies only for violations of certain provisions of the Companies Act.