In order to encourage trading volume amidst a volatile stock market, the Association of National Exchanges Members of India (ANMI) has demanded setting up of a Sovereign Wealth Fund (SWF) from the UPA government.
Apart from that, association has also sought other initiatives including rationalization of security transaction tax (STT) and levying uniform stamp duty, said Bijay Murmuria, president of ANMI, on the sidelines of a board meeting here, adding that currently states charge different stamp duty on transaction in stock market.
According to Murmuria, ANMI has been analysing Singapore Exchange (SGX) Nifty's volume and open interest data for last 13 months and has observed a shift in foreign institutional investor's (FII) future trading towards SGX Nifty.
"The popular SGX Nifty and a series of regulations including curb on investments through participatory notes (P-notes) and excessive trading cost in domestic financial markets have made investment in India less attractive. There has been notable shift in Nifty open interest (OI) position from India to Singapore.
The value of SGX Nifty OI has risen from S$ 68,90,000 (Rs 22 crore approx.) to S$ 43,80,84,000 (Rs 1400 crore approx.) after the Securities and Exchange Board of India (SEBI) imposed curb on p-note investments last October-07. Subsequently, the share of SGX Nifty future OI rose from 8 percent immediately after the p-note curb and now stands at a 43.40 percent," said Murmuria.
"The central government should continue to take measure for improving liquidity and set up a SWF to support the equity of well managed listed companies.
The SWF should be government owned investment vehicle and should have acquired significance in the recent times due to their proliferation and size," he added. Recently ANMI has made a presentation to the finance minister, demanding that the government should also look at reducing STT by nearly two third since it could act as a breather to the cash strapped system.
