PMS investors may get to access accounts directly

De-listing norms in a few months, says Bhave.

The Securities and Exchange Board of India (Sebi) is thinking of empowering investors under portfolio management services (PMS) to verify their accounts by bypassing fund managers.

“We have made it mandatory in case of PMS to segregate one client’s assets from others’. We are now going a step ahead by empowering the investors to examine assets in their accounts, irrespective of the fund manager. Once the assets are in segregate depository accounts, it will be possible for investors to get confirmation from the depositors directly. We hope to have this system in place along with the segregation,” CB Bhave, chairman, Sebi, said at a seminar organised by the Bharat Chamber of Commerce in Kolkata.

Bhave said mutual fund houses were not subject to the same regulations as they already had a proper system of checks and balances.

“There are protests building up....but it is in the interest of the market that even if the cost of PMS goes up, the assets are segregated. The segregation is necessary as PMS are small outfits and do not have proper checks and balances in place,” said Bhave.

Last year, Sebi had issued a directive to PMS managers to segregate investors’ accounts rather than operating the funds in pooled accounts.

Real estate investment trust (REIT)
Sebi was also working on norms for Real Estate Investment Trusts (REITs), said Bhave.

The regulator would consider allowing REITs in India, he said.

A REIT is a security that sells like a stock on the exchanges and invests in real estate directly through properties or mortgages. “Norms on real estate mutual funds were introduced in April 2008. However, they did not take off as the markets were down. We will take a call on REIT based on the success of the real estate mutual funds,” he said.

De-listing norms
Sebi would come out with guidelines on de-listing in the next few months, said Bhave.

“We are working on the de-listing guidelines. They should be out in the next few months,” he said.

Sebi to pay first year peer review auditing fee
PTI reports: Sebi said it would pay the first-year fees to auditors who undertook peer review of accounts of the Sensex index tracker companies, a concept which was introduced to prevent any Satyam-like fraud.

“Sebi will pay peer auditors’ fees for the first year and then review how this exercise will be funded. It seems there is a conflict of interest if companies pay the fees. So we decided to pay to complete the process,” Bhave said.

Bhave said the regulator had received reports of several peer reviews of the index tracker companies but declined to state the number. Bhave accepted there had been some delays in the selection of auditors by Sebi after verifying the conflict of interest with the company concerned.

He denied there was any deadline for such peer review but admitted process was taking longer than anticipated. Bhave said he had heard of certain issues concerning the peer review concept and wished to complete this process before it went for a review.

On buyback of shares, Sebi said the regulator was aware of certain issues relating to announcement of open offers and deviation from actual action by the companies.

The Reserve Bank of India would soon put in place a mechanism to facilitate settlement of trading in corproate and other bonds through a clearing house, a move that would infuse transparency and encourage development of the bond market, Bhave said.