Regulations Seen To Be Inconsistent And Ad Hoc

Contrary to the populat perception, a section of legal experts feels that the Indian securities market is being over-regulated. It is argued that the regulatory mechanism and drafting of important rules and codes vis-à-vis the securities market has been imprecise in some cases, often inconsistent and ad hoc.

Legal experts are of the view that the holistic picture is not in view and at no time has a comprehensive view of the Indian capital markets been taken.

According to Cyrill Shroff, joint managing partner, Amarchand & Mangaldas & Suresh A Shroff & Co., the solutions have addressed only 10 per cent of the problems.

Some of the capital market regulations are yet not fully specialised and remain inconsistent and ad hoc, he said. The market has in recent days witnessed draft regulations on the revised takeover code, and changes are being mooted in the Companies Act and the Income Tax Act.

Shroff argued that the Depositories Act was poorly drafted and that there were several grey areas which required a re-look. In the coming years, when one is looking at the regulations to be framed for the securities market, one major misfit which has not been looked at is in relation to derivative-based instruments. This will be the focus for the future, and unfortunately we have to cover a large distance on this front, Shroff said.

He suggested that Sebi should have a greater coordination with the Institute of Chartered Acco-untants and with bodies like the Registrar of Companies (RoC) and DCA.