The PSE brokers, mainly the five PSE directors who have since resigned owing moral responsibility, had earlier approached the Sebi chief to take a mild view in the case as they had given their full co-operation to the Sebi investigating team and had conceded that they had indulged in illegal trading in the past.
How can any commitment be given to the PSE brokers, Mehta said when asked if the PSE brokers will be let off because of the plea.
Denying that PSE has been singled out in its crackdown against badla and short selling, Mehta said that similar action has been taken in other exchanges. Because of several complaints and repeated media reports on illegal trading at PSE, we had to act on a large number of brokers, he added.
After the PSE brokers reply to the show-cause notices served on them, Sebi will give them proper hearing before taking action, he said. We will operate as quasi judiciary and therefore cannot spell out any thing unless hearings and investigations are completed, he said.
The Sebi clean-up operation to get rid of illegal trading in different stock exchanges will continue, Mehta asserted. Regarding the Kanpur Stock Exchange, he said Sebi had already suspended three brokers as part of its clean-up drive.
The Sebi chief confirmed that the officials probing the PSE case had found a nexus between Pune brokers and brokers from Mumbai, Calcutta, Delhi and other stock exchanges.
On the charge of some PSE bear operators that Sebi's action against Pune brokers is influenced by bull operators close to Reliance Industries, Mehta said, in fact, the regulatory authority has already taken action on bull operators by freezing their auction money amounting to Rs 25 crore. Whereas, we are yet to take action on bear operators, Mehta shot back. Because of Sebi's stern action against the share price manipulators, several brokers and other individuals had filed over 100 court cases against the Sebi, challenging the powers of the regulator to stall trading and freeze auction money, he added.
With increasing competition from larger stock exchanges like BSE and NSE, the regional stock exchanges and their brokers will now have to work out new survival strategies.
Stating this here on Sunday, Mehta warned that market forces could pose problems if the regional bourses do not gear up to face the future challenges.
Realignment of broking business will take place as the big brokers will focus on larger investors and the regional brokers can cater to the small investors who have been neglected by the big brokers, he said.
Asked whether the regional stock exchanges will go the US way, he said that the regional bourses in India will have to go to the hinterland where the investors are not being serviced and create more business to survive in the competition.
Sebi has received 20 proposals for the setting up of regional exchanges and the regulator is ready to give them the necessary permission if they meet all the Sebi trading norms, he said.
Only yesterday, brokers from Visakhapatnam had approached me to set up a regional stock exchange there, he said.
If the new proposals for the setting up of stock exchanges can establish on-line computerised trading system, a clearing house and meet capital adequacy and other Sebi trading norms then we have no problem in allowing them to operate, he said.
However, out of the 20 applicants for the setting up of regional bourses, he said only two had replied back to Sebi's queries pertaining to the trading norms and financial capabilities of the brokers initiating the moves to set up the stock exchanges.
Even if new regional bourses come up, Mehta said their survival will depend on the kind of services they offer in the future. Re-ordering of business will have to take place if the SEs have to survive the growing competition in the market place, he said.
