The finance ministry is planning to set stiffer penalties for market-related offences in line with those prescribed under the Securities and Exchange Board of India (Sebi) Act.
A comprehensive amendment to the Securities Contract (Regulation) Act, 1956, will set specific penalties for market participants like mutual funds, depositories, clearing corporations and derivatives trading.
U K Sinha, Joint Secretary (capital markets) in the finance ministry, today said the new law would be known as the Securities Act and would involve consequential amendments to the Sebi Act and the Depositories Act.
Sinha also said trading in interest rate derivatives would begin by the middle of June. He said the proposed Securities Act would include rules on mutual funds because there were very few norms for the sector. Similarly, trading in derivatives with no underlying securities should be brought under the purview of the Act, he said.
The changes are also likely to bring private placements under the purview of the new Act. He said the ministry was attempting to correct the emerging problems in the securities market to ensure that they functioned effectively as fund mobilisers for companies and as attractive investment options for the middle class.
On the issue of overlapping regulations, Sinha said though there should ideally be a single regulator, the domestic market was not ready for such a step. Instead, the finance ministry and other regulators were working on closer co-ordination among themselves.
Sinha also said three technical committees had been formed under the aegis of the co-ordination committee on capital markets for this purpose, as per the recommendations of the joint parliamentary committee on the 2001 stocks scam.
