Some of the reform measures announced in March 2001 were without taking the participants into confidence.
Though they were vital for the capital markets, the implementation was without the right infrastructure.
According to a memorandum submitted to MPs and regulators in New Delhi yesterday by the Securities Industry Association of India (SIAI), the government should introduce deferral products in some form to impart liquidity in the market, rolling and weekly settlements should exist till infrastructure such as electronic fund transfer and online depositories are set functioning, and to expedite the process of corporatisation and demutualisation of the stock exchanges proposed by themselves.
Other points suggested in the memorandum are the promotion of the retail debt market; reviewing powers of the Securities and Exchange Board of India under Section 11(B); standardise the process for introduction of reforms as followed internationally and liberalise bank finance to stock brokers and investors.
According to the memorandum, adequate bank finance will keep the market vibrant and to create a vibrant derivatives market sub-brokers should be recognised. It has also suggested to bring in clear regulations about the accountability of regulators which is as important as that of market participants.
SIAI pointed out that banning of deferral products have taken away one of the most secured and liquid investment option from the retail market.
Compared to instruments such as bank fixed deposits, mutual funds and postal saving schemes, trading under the carry-forward system offered the best returns.