UK Sinha, Chairman of SEBI, said that the criticisms levelled against the securities market regulator’s proposals to curb unsolicited investment advice is unfair. “SEBI is hearing allegations that it is curbing freedom of speech in the market. Have a heart,” Sinha said, “SEBI is not big enough to decide on freedom of speech. Every day, I get SMSes telling me to buy a certain stock, because it will go up 20 per cent the next day, as do many other investors. SEBI will not be silent on this. Instead of criticising our proposals, offer solutions.” Over the last few weeks, the regulator has received a lot of flak, particularly in the press and on social media, regarding its proposed amendments to the Investment Advisor Regulations, 2013. One of the proposals was to fine and ban entities that provide “free” stock market “trading tips” over messaging services like Whatsapp. The proposals are currently open for public comment and feedback. “Even with our proposals on high-frequency trading and co-location of exchange and traders’ servers (for algorithmic trading)”, Sinha said, “SEBI has received lots of strong comments. “Let me assure you that we have the country’s best technical brains looking at this, at analytics of trade data. We’re not going to borrow from foreign regulations blindly. This is an area of concern; there are risks involved with HFT, some members are getting unfair trade advantage and SEBI is going to check this.” Sinha was speaking at the annual conclave on the capital markets organised by industry body CII. Speaking on the performance of the primary market so far this fiscal, Sinha observed that over Rs 22,000 crore had been raised, making this is a record year for capital raising. In this context, he also said that SEBI is working towards reducing the lag in the listing of new shares from six days after the close of the issue (t+6) to four days (t+4). For the corporate bond market also, the regulator has been talking to RBI about increasing the market’s liquidity and the number of market makers and new rules can be expected in the coming months, he said. On the corporate governance front, Sinha noted that, like in many Fortune 500 companies, the difference in pay between the CEO and the company’s median pay is extremely high in India as well. “Corporations must take note of what’s happening in society. In many Fortune 500 companies, shareholders are asserting their rights and defeating board resolutions, even removing CEOs. We don’t want to prescribe anything about the ratio and difference in pay, but I would urge you to think about this.” He also said companies must work towards getting more diversity on their boards and senior management.
The Securities and Exchange Board of India (SEBI) aims to crack down on high-frequency trading (HFT), having made proposals for amendments to the Investment Advisor Regulations to fine and ban those promising “free trading tips” for the stock market over messaging services. SEBI warns that there are risks in using HFT, and it also plans to check the corporate bond market’s liquidity and market makers in case new regulation may be needed.