To boost retail participation, a Sebi study today suggested ways to identify any impediments to such investor entry in the securities market and stringent disclosure norms for issuers.
The study, 'The elusive retail investor: How deep can (and should) India's stock markets be?' conducted by Sebi's Development Research Group (DRG), has suggested various measures to enhance retail investor participation in securities market.
The study suggested ways to identify any impediments to retail investor entry and participation in the securities market. It also noted for taking into account the need for such investors to invest in small lots and their weakness relative to institutional and high net worth individuals when seeking to acquire shares.
"There is a need to ensure that information disclosure by issuers of equity and listed companies is comprehensive and clear," the study noted.
The study, coauthored by C P Chandrasekhar, Sarat Malik and Akriti further suggested for strengthening regulation aimed at guarding against market manipulation and price rigging.
It also proposed for educating investors on the potential savings opportunities in the market as well as on an evidence-based, investment strategy. To strengthen the mutual fund distribution network in order to attract retail investors to the capital markets.
The study, part of an initiative by Sebi's Department of Economic and Policy Analysis, examined the actual trends in and possible influences on the allocation of household and individual savings to investment in financial instruments.
It also examined the factors underlying the perceived inter-temporal volatility in retail investor presence in the equity market and the implications this has for investor behaviour.
The Securities and Exchange Board of India (Sebi) has built and strengthened its market monitoring and regulatory apparatus.
Besides measures that simplify the rules, ensure the possibility, improve the ease and reduce the cost of retail investor entry and activity in stock markets, the market regulator has looked for ways of incentivising retail investor participation in the markets.
"Yet, the prevailing perception has been that the individual, small, retail investor has been less important in the market" it added.
