Jaitley asks Sebi to be vigilant about market violations

Pitching for greater transparency in rule-making and other functions of regulators, finance minister Arun Jaitley on Sunday asked Sebi to be vigilant about possible violations in markets and focus more on retail investors.

Pitching for greater transparency in rule-making and other functions of regulators, finance minister Arun Jaitley on Sunday asked Sebi to be vigilant about possible violations in markets and focus more on attracting retail investors and addressing their grievances.

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Talking to reporters after the board meeting, Sebi chairman UK Sinha said that the finance minister also discussed the implementation of Union Budget announcements related to the capital markets, as also the current state of the investment climate in the country.

In Sunday's board meeting, Sebi cleared two key proposals to enable creation and listing of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs), for which tax concessions were announced by Jaitley in his budget speech.

In his first interaction with the board members and top officials of the capital markets regulatory body after taking charge as Finance Minister, Jaitley also discussed issues related to recommendations of the Financial Sector Legislative Reforms Commission (FSLRC).

The FSLRC report, submitted last year to the government, has suggested wide-ranging reforms in the way the financial sector is regulated in the country including in the banking, insurance and capital market segments.

Sinha indicated that the government might have wider consultations before taking any legislative actions on FSLRC recommendations, but it was up to the government to take any final call on these issues.

Later in a statement, Sebi said that "the minister advised Sebi to remain vigilant about probable violations in the market, focus more on attracting the retail investors and on redressing investor grievances".

"The current state of the investment climate in the country and the recommendations of FSLRC were also discussed," it added.

The Sebi chairman apprised Jaitley of the initiatives taken by the regulator and a presentation was made on the status of the securities markets.

"Two-three important messages which the Minister gave to us were, for example, measures to be taken to attract retail investors into the market.

"He was very keen that we should take more measures...and issues like investor awareness were discussed," Sinha said.

The Sebi chief said that Jaitley also discussed the FSLRC recommendations with the board.

"The finance minister suggested that the regulators should move towards greater transparency," Sinha said.

When asked about the impact of the suggestions made in the FSLRC report, Sinha said that any decision in this regard would be taken by the government and not in the board meeting of Sebi.

"He (Jaitley) did not disclose his mind on this," the Sebi Chairman said.

On legislative measures suggested in the FSLRC report, Sinha said that his understanding was that the government would have more consultation before they make up their mind.

Asked about the non-legislative changes, Sinha said, the finance minister is of the view that "all regulators should work towards more transparency in regulation-drafting."

Asked about the surveillance functions of Sebi, Sinha said that Sebi also presented before the board a report on all such actions taken by it during the last quarter.

Besides chairman Sinha, the board meeting was attended by three whole-time members (Prashant Saran, Rajeev Agarwal and S Raman), economic affairs secretary Arvind Mayaram, corporate affairs secretary Naved Masood and part-time member P C Chhotaray. Besides, Sebi's executive directors and other senior officials were also present.