Derivatives Panel Meet With Players On June 5

The Sebi-appointed L C Gupta committee to consider introduction of derivatives trading will hold its crucial meeting with foreign institutional investors (FIIs), mutual funds and stock brokers on June 5.

This meeting will discuss the entire issue of derivatives trading, including the Barings Bank collapse case.

However, the committee is not likely to discuss any regulatory issues with the market players, sources said.

A majority of market players in their response to the 30 point questionnaire from the Sebi, have expressed their willingness for the introduction of derivatives trading. The committee had sent out the questionnaire to 200-odd potential users of derivatives to ascertain their views on trading in this instrument.

 

The meeting on June 5 will be followed by the regular meeting of the committee the next day. According to reliable sources, the meeting on June 6 will take up the regulatory issues.

The meeting on June 5 will be conducted in four stages. The committee will individually meet the mutual funds, brokers, FIIs and domestic institutional investors, in separate sessions to the view point of each of these players. Some of the committee members informed Business Standard that users of derivatives have mainly two concerns -- one of market manipulation and margin specifications.

"The opinion of the market players will hold significance. But the users of derivatives should not necessarily have expertise on the impending issues. It is the committee's responsibility to frame the guidelines and the take care of the need of a strong clearing house."

However, it has come as a surprise to many that the committee decided to seek opinion of the potential users of derivatives only after drafting the broad guidelines.

The five-member working group has already framed the broad regulatory frame work for derivatives trading. It is reliably learnt that the draft was expected to be placed before the committee members in the last meeting.

"The committee realised that though it has the responsibility of framing the regulatory frame work. However, it cannot function in a vaccum. It was thus decided to get a feedback from the user," informed a committee member.

Committee members informed that the decision to seek users' opinion was taken up on L C Gupta's insistence.

Thus it was decided to distribute the draft report only after seeking the opinion of the potential users of derivatives.