Poor public participation in stock market has always been a concern for the regulators, but even poorer seems to be the response to key draft regulations that are put out for public comments before becoming laws.
A high-level committee formed by capital market regulator Sebi last week submitted its recommendations on changes in ownership and governance norms for stock exchanges and other market infrastructure institutions after analysing the comments from the public and various market players.
However, the recommendations that suggested sweeping changes in the way stock exchanges are owned and earn profits among other issues were arrived at after only 29 responses received by the Sebi committee in over six months.
The number of responses were even less than the total number of questions posed by the committee in a questionnaire it had put out for public comments.
Besides ownership and profitability of the bourses, the recommendations were also made on issues like listing of the bourses, their regulatory role, foreign shareholding as also appointment and remuneration for the top management personnel.
Similarly, another key regulation recently framed by the Sebi was allowing the retail investors to invest up to Rs two lakh in initial public offers, while doubling the limit from Rs one lakh earlier.
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The proposal for this was also put out for public comments, but a decision was taken only on the basis of 21 favourable comments as against as many as 260 comments made against increasing the limit. Sebi justified the decision of going against the majority on the ground that bulk of negative comments appeared to be coming from one or two sources.
On the other hand, the Sebi committee on ownership and governance of market infrastructure institutions received total 29 responses to its questionnaire, including five from nation-wide and regional stock exchanges, seven from associations and four from market intermediaries.
Responses came from only one domestic institutional investor, one investor association and six individuals.
Industry experts said that the regulator needed to mull over ways to improve the public response to its draft proposals and the same could be done with ways like putting out the draft proposals mandatorily in the newspapers and other publications rather than only on the Sebi website.
The regulator could consider taking steps for increasing the awareness about public comments alongside the initiatives about expanding the investor participation in the market, they added. An estimated one per cent population of the country is only said to be present in the capital market.