Faced with criticism on its proposed norms to check investment advisory practices, Sebi chairman U K Sinha said the regulator cannot remain silent on unsolicited investment advice and urged the critics to come out with solutions for their protection instead.
Sinha said that the Securities and Exchange Board of India (Sebi) has extended the deadline till November 30 for public comments on the proposed norms to regulate investment advsiors on request from various asset management companies.
Various norms proposed by Sebi under IA regulations, such as mandatory registration of mutual fund distributors giving incidental advice on MF products has met with strong criticism from MF and financial advisory bodies, who contend that the move would be a impediment to growth of the MF industry.
“Lot of comments have been received by us and lot of comments have been made in the media. Many of these comments have taken a very strident position on Sebi’s proposal.
Allegations are being made that Sebi is trying to take away the freedom of speech from people of this country. Sebi is too small to do that,” he said.
Noting that he himself has received stock tips through mobile messages, Sinha, who was addressing the CII financial markets summit here, said, “I am sure similar messages go to thousands of people”.
“So, investors are being misled and Sebi can’t be expected to stay silent on that. Instead of criticising the proposals, I offer you to provide a solution and all suggestions would be received very seriously,” he added.
After its board meeting in September, Sebi proposed to ban unauthorised trading tips through SMSes, WhatsApp, Twitter, Facebook and other social media platforms, as also games, competitions and leagues relating to securities market.
In a detailed consultation paper, Sebi has proposed to ban ‘free trial’ offers by investment advisors for their prospective clients and sought to make it mandatory for even registered research analysts to provide their research reports to all classes of investors at the same time.
Exuding confidence on the risk management framework in the country’s capital markets, Sinha complimented the bourses for efficiently handling the markets which were volatile on account of Donald Trump winning the US Presidential race and Indian government scrapping the Rs 500 and Rs 1,000 currency notes.
Noting that Indian equity markets and mutual funds were progressing well, he said the country may soon have its first Infrastructure Investment Trusts (InvITs).
He also said that Sebi has received an application for registration of Real Estate Investment Trusts (REITs) and the regulator is seriously considering it.
The Sebi chief also noted that while lot of steps are being planned to incentivise corporates to access bond markets, the regulator has put in place a complete repository of primary as well as secondary bond issuances.
Sinha said that Sebi is in discussion with the Reserve Bank on issues concerning market-making and repo operations in the corporate bond markets and a solution would be available in the next few months.