In its bid to bridge the regulatory gap in respect of various unregulated collective investment schemes and money circulation schemes in India, the Sebi-appointed International Advisory Board (IAB) said there is a need for an independent and separate regulator with sufficient resources as the regulation of such schemes was not the prime objective of a securities market regulator.
At its second meeting in Mumbai last weekend, the board also stressed on the importance and need of state government participation to successfully regulate such schemes as there was a criminal enforcement angle attached to the regulation of such schemes.
The role of IAB is to guide Sebi by bringing in the global experiences and emerging developments and challenges. The IAB meets twice in a year. The first meeting of the IAB was held in January 2012.
Further, in the light of the recent flash crash incident, the board discussed a host of issues surrounding the use and impact of high-frequency trading (HFT) on volatility and liquidity in the markets. It was acknowledged that maintaining the trust of participants was most crucial and could be achieved by ensuring stability in the markets.
?The pros and cons of HFT/Algo trading on capital formation, efficiency of secondary markets and fairness to market participants were intensely deliberated. It was acknowledged that nearly all financial markets across the globe have these issues and the International Organization of Securities Commissions (IOSCO) has been actively discussing ways in which regulators and exchanges should modify market structures to tackle the challenges posed by HFT,? stated the Sebi press release.
Members of Sebi, along with industrial professionals and head of NSE, BSE, MCX-SX and USE had participated in this discussion. Issues pertaining to capital adequacy norms and regulations of research analysts were discussed.
