SEBI to rein-in unscrupulous advisors, develop derivatives market

Mumbai, Feb 20 (UNI) With a view to rein-in rogue investment advisors the Securities and Exchange Board of India (SEBI) today said it would introduce stringent regulations and also set up a committee of experts to develop the derivatives market.

''A large number of investors are guided by different kinds of investment advisors offering advice. Is it advice, driven by expertise or driven by an agenda? With regard to the need for expertise as well as to fix responsibility in the advisory function, we have decided to frame regulations for investment advisors on a priority basis,'' SEBI Chairman M Damodaran here said in a release.

To achieve this agenda, Mr Damodaran said the market regulator will be guided by the experience gained in protecting investors in other countries.

SEBI is also slated to set up an expert committee to explore avenues for developing a vibrant derivatives market and take a call on its primary market committee's proposal for compulsory grading of Initial Public Offers (IPO) after taking additional suggestions from a pilot project on optional rating of public issues.

''We have decided to constitute a small committee of experts to make a detailed study of various aspects of the derivatives segment, suggest changes and also identify new products that ought to be introduced in the Indian securities market,'' Mr Damodaran said.

This committee will consist of SEBI representatives, financial experts and academia. Regarding compulsory grading of IPOs, a rating agency would make a presentation on the experience gained through voluntary rating of some issues listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) at the next board meeting in March '07, the release added.

UNI