Stock market needs to be deemed as an essential service

Recognising the importance of capital markets in ensuring the nation's economic stability, says Vijay Bhushan.

The current Coronavirus (COVID-19) pandemic has shaken up every major economy of the world and wreaked havoc in global financial markets, including India. As the number of infected cases has started rising, the government has announced a 21-day of the country, asking every business, office and industry sector to shut shop temporarily, except the essential services.

Recognising the importance of capital markets in ensuring the nation’s economic stability, the Government of India, however, decided to keep services of stock market entities exempt from the purview of this 21-day lockdown.

This distinction was indeed well placed as smooth functioning of Capital Markets is important for securing the economic growth of any nation. Keeping the machinery running even when times are tough will be imperative to provide some level of confidence to investors about their future prospects in the market and ensure they don’t completely abandon their presence when tides have turned. The state governments, too, are making commendable efforts in implementing the Centre’s directive of complete lockdown in letter and spirit to safeguard their people from the clutches of the COVID-19 epidemic.

That said, the members of the financial services industry are facing logistical difficulties while commuting to their workplaces to operationalise their central servers, back office functions, risk management and depository services to meet the requirements of their clients and compliance of Exchanges/ Securities and Exchange Board of Inia (Sebi). Members of the broking community and depository participants across the country from the states of Punjab, Haryana, Uttar Pradesh, Madhya Pradesh, Bihar, Karnataka, Telangana etc., had as it been impacted on account of complete lockdown declared by these respective states.

While these lockdown measures are absolutely imperative to preserve the health of 1.4 billion Indians, the state governments also immediately need to notify Capital Markets services, including share broking and depository services, as ‘essential services’ on a priority basis. This will provide absolute clarity to the law enforcers and police personnel responsible for implementation of lock-down measures at the ground zero and enable them to clearly demarcate people representing the industries that are exempt from the lock-down orders. Capital Markets are the driving force for any economy, and it is important to keep the engine warm and running even while navigating through rough weather.

In the event of all states failing to declare ‘share broking and depository services’ as essential services exempt from lockdown/curfew, then the market regulator needs to take a decision to order closure of the stock markets. Any further delay can lead to serious systemic repercussions on smooth functioning of our Capital Markets and also put the economic future of India in serious jeopardy.
 

(Vijay Bhushan is president of Association of National Exchanges Members of India. As told to Puneet Wadhwa)