Regulator's unique database move rankles intermediaries

The Securities and Exchange Board of India's (Sebi) move to introduce compulsory unique database for all market intermediaries, including stock brokers, their relatives, high net worth investors and employees, has invited criticism from all concerned entities.

A brokers' forum, National Stock Exchange Members Association (NASMA), moved the Delhi High Court challenging the rationale of the Sebi move.

The Association of NSE Members of India (ANMI) has also joined the bandwagon to criticise the market regulator.

A top source in ANMI said the market watchdog, on instance of the Delhi High Court, had a meeting with the representatives of the brokers to sort out the problem.

It is learnt that Sebi now decided to leave out the relatives of the stock brokers from the list of those required to get unique ID. The rationale pleaded by the brokers is that even if a broking firm is promoted by joint family, relatives who are not actively engaged in the broking business, should be left out.

A study by ANMI says the existing practice of filling know-your-client form and demat account opening form are adequate. These forms incorporate name, address, contact numbers, photograph, signature, residence proof, bank account details, PAN number and tax history.

The appointment of five points of service (POS) for the proposed mapin has also attracted wrath as the list of the POS includes a company whose sister concern is engaged in stock broking.

"Who wants to hand over a sensitive information to a competitor? Is it not like a credit card issuing bank handing over the entire client database to another competing bank?" an ANMI member asks.

The broking community says biometrics identification, like fingerprint of a person amounts to criminal suspicion. Further more, the intermediaries along with their relatives and employees to POS imposes one day's absence from work and extra payment of Rs 300 each.

Although Sebi says the exercise will be done at no-profit-no-loss basis, it involves huge money.

The brokers said the entire exercise of mapin database may be called a wrong step in right direction. Right direction because it aims at eliminating the backstage identity crisis that has plagued the market in the past while it is a wrong step because it intrudes into several areas in breach of law, privacy and sensibility.