'Mkts have lost investors' trust'

Sebi chief says the major challenge will be to restore confidence and credibility.

The chairman of the Securities and Exchange Board of India, U K Sinha, on Friday said the financial markets had lost the confidence of investors and called for a concerted effort to restore this.

“The credibility of all us (working in the field of finance) is getting challenged. The whole trust and faith has been belied. The major challenge will be to restore that confidence and credibility,” Sinha said. “A large number of people are expressing their distrust with anger. They are asking a genuine question, that we are not responsible, we are honest and sincere workers in our factories and farms. What did we do to deserve this? And, somebody has to answer that question.”

While delivering a speech at a conference which had a theme of ‘Positioning portfolios for turbulent times’, the chairman said, “The world is passing through difficult and uncertain times. Whatever projections people were making about growth, employment, national debt, are all getting revised at a rapid pace and in a downward manner.”

FINDING SOLUTIONS

* Further investigation underway for IPO norm violation

* To reform entire IPO process

* More powers to detect insider trading

* Regulating MF distributors

* Appointing one agency to regulate collective investment schemes

* To regulate alternate investments

* More checks and balances on algo trading

Adding: “The projection the International Monetary Fund (IMF) made in September was revised in December. Towards the end of December, words like recession have started coming up in their literature. Which means the threats are for real.”

Sebi says it is working on reforms that may help restore confidence in the markets. These include better Initial Public Offer (IPO) regulations, tightening of insider trading rules and a unified regulator for collective investment schemes.

Sinha said the revised IPO norms will be out in a few months. “It will be difficult to quantify the exact timeline, as it is a complicated area and a lot of experts are working on it,” he said on the sidelines of the India Investor Conference. “The whole idea behind the new IPO norms is to simplify the entire process and help corporates raise money.”

The new guidelines will be aimed at reducing the timeline, simplifying the process and improving the disclosure norms. The decision to review the entire process was taken after several companies were found violating the IPO rules. Sebi banned seven companies in this connection and several more are under investigation. “Investigations are a time-consuming process. We will do our job well and only then announce,” Sinha said, when questioned about the probes.

When asked about the discussion with various authorities for strengthening insider trading investigations, Sinha said, “All authorities are supportive of the idea that there needs to be more clarity and conformation on insider trading requirements. The draft bill has been put in Parliament, where insider trading will be defined.” On earlier occasions, too, he has stressed the need to improve regulatory architecture for more efficient detection of insider trading.

On collective investment schemes, Sinha said having a single regulator is being discussed by the Financial Stability and Development Council and the government.