Markets to integrate in 10 months: Sebi Chief Ajay Tyagi

He says he expect exchanges to deal with both commodities and equities from October 2018

AJAY TYAGI, chairman, Securities and Exchange Board of India, spoke to journalists after its board meeting on Thursday. Edited excerpts:

On integration of commodity and equity exchanges

When the Forward Markets Commission was merged with Sebi in September 2015, there were different timelines for different items. We could expect exchanges to deal with both commodities and equities from October 2018. However, these products will have to be introduced with approval of Sebi. At the brokers level, we have already brought in the required synergy. It is now time to bring in synergy at the exchange level. We will soon come up with the required guidelines.

Will the integration lead to consolidation?

That might or might not happen. Sebi is looking at it from the point of view of the securities market. The concept is that there is a single regulator at the highest level. We are looking at it from clients’ point of view and investors’ point of view, to bring in the synergy.

On deferring loan default disclosure of listed companies:

It was discussed at length and I must say that when we issued the circular in August it was suo motu (on our own accord). No one really asked us to come out with it. Concept-wise, it is good but there are implementation issues which we have discussed at length. It requires further consultation and, hence, has been deferred further by the board.

Sebi’s long-term strategy to deal with leaks of unpublished and price-sensitive issues:

When the whole system depends on trust and when we say the market is booming and people are investing, if select people have access to results before these are out in the public domain, this is just not acceptable. That is how we started this and we are looking into it from all aspects, especially the technological improvement our surveillance system needs. We will do whatever legal and enforcement action is required, as one cannot really hide behind technology and say it is encrypted and nothing can be done.

Besides Axis Bank, are other companies also under Sebi’s lens?

Yes. There are more companies we are investigating. One thing is clear, that some information has been leaked before it was submitted to the stock exchange. Hence, we asked companies to investigate at their level. We are also investigating it independently.

Status on the list of 331 suspected shell companies, identified by the ministry of corporate affairs:

We have taken action on the administrative level under various securities laws. So far, 49 of them have gone to the Securities Appellate Tribunal and 12 of them have a stay order. Further, Sebi has heard 43 cases, of which the order has been passed in 34 cases. Forensic audits have been ordered in 28 cases. In six cases, suspension on trading has been removed.

On reviewing settlement regulation:

The current regulations clearly talk about irregularities that can be resolved via consent and violations that cannot be. However, as demands are changing, we have set up an internal group to look into possible tweaks.

Development of the derivatives market:

We have received many suggestions from market participants and are in constant consultation with them to evolve a new framework. We are targeting March 2018 for this.