Verma Hints At Changes In Gs Patel Panel Suggestions

The five-member committee headed by professor J R Verma, to decide on the revival of badla at the Indian capital markets, held its first meeting yesterday. The team reviewed the observations made by the previous committees on the revival of such trading.

Verma said that contrary to popular perception, the exercise was not a debate on the introduction of badla versus futures and options trading.

He hinted at making changes in the G S Patel committee recommendations.

It will not be fair at this stage to discuss the changes that would be made as we are deliberating on them. The periodic review of badla has been suggested by the G S Patel committee itself, Verma said.

The committee is set to meet again on May 21 and the Ahmedabad, Calcutta and Delhi stock exchanges will be asked to send their views on the reintroduction of badla.

He said there were some issues which required to be discussed and ironed out before a draft report could be prepared and submitted to the Securities and Exchange Board of India (Sebi).

The talks are essentially taking into account the historical perspective of badla trading. The G S Patel committee report has traced out 38 points related to badla. Obviously some of them have already come into existence and thus become redundant, Verma said.

Verma declined to comment on what factors would need to be further discussed with the stock exchange heads and committee members but said the introduction of badla would have to keep in mind the following issues:

Maintaining the integrity of the markets Ensuring fair pricing

Trade sovereignty/counter-party risks and Investor protection

The BSE does want some of the conditions to be relaxed, which the committee will look at. The committee comes into place at the fag end of the debate on badla trading...it is thus not a break from the past.

After all, the G S Patel committee had reviewed the case in July 1995 and modified it in October, he said.

BSE president M G Damani, also a committee member, had already submitted a detailed note to the Securities and Exchange Board of India and the finance ministry on the changes recommended while introducing badla in its original form.

We will present further data (linked to figures) on badla trading at the next meeting, Damani said.

National Stoc k Exchange managing director R H Patil, a committee member, and a strong advocator of futures trading, was conspicuous by his absence as he was abroad.

However, a note on his views were circulated among all the committee members.

The rest of the committee, includes M M Kapoor, Unit Trust of India executive director, and S Kannan from a south-based investor protection association.