Market regulator the Securities and Exchange Board of India (Sebi) today said the new disclosure norms on participatory notes would be sufficient to keep a tab on hot money flowing into stocks and these guidelines would be in force by October-end.
"Any participatory note issued by brokers, Know Your Customer (KYC) details have to be submitted to the Sebi from October-end," Sebi Chairman UK Sinha said here today at an interactive session at the Bharat Chamber of Commerce here.
"The new disclosure norms for participatory notes to Sebi will be sufficient to keep a tab on foreign money flowing in," Sinha said when asked about reports of black money flowing back into the Indian market.
He later said Sebi had made mandatory for KYC details for all participatory notes issued post-September quarter.
"We do not want to discourage, but a set of rules will be framed for investor protection," Sinha said.
P-Notes are instruments like contract notes issued by FIIs to overseas investors who cannot directly invest in equity market as they are not registered.
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Sinha said Sebi would iron out operational issues like KYC norms for FIIs investment in mutual funds. "There are some operational issues, but they will be sorted out," he said.
Sebi will also take a decision on overhauling the IPO process, saying, "We are taking a complete relook at the IPO process."
Meanwhile, Sebi today asserted that the regulator would not spare any violation of regulation and take strict action.
"Unless we take strong action, the situation will not improve," Sinha said.
He said the client code modifications was to the tune of Rs 56,000 crore per month. "When Sebi took action, it came down to Rs 120 crore a month. Even now we are not happy."
Sinha said that one particular stock exchange's under recovery of margin in the past was as high as Rs 12,000 crore which, he feared, could have led to a payment crisis.