ASSOCHAM

SEBI ready for all eventualities in markets on vote-counting day, says U.K. Sinha

A day ahead of counting of votes for the Lok Sabha elections, SEBI Chairman Mr U K Sinha said today at the ASSOCHAM meeting that the stock market regulator along with the Reserve Bank and the government has prepared a strategy to deal with any unusual movement in the market tomorrow.

 “SEBI along with RBI and the government of India has prepared a strategy and we are ready for any unusual movement in the market. We are ready with the guidelines as to what action to take in what situation,” Mr Sinha said after his interaction with the ASSOCHAM members on the primary market.

Asked about the possible risks to the market because of exuberance in the run-up to the election results and in the possible scenario of the results not going on the expected lines, the SEBI chairman said, “Exchanges are looking into as to what are the clients’ collateral positions, the brokers’ collateral positions. We are conducting a daily stress test and we are more than satisfied that our risk management systems and payment and settlement system is going to work fine.”  

The regulator already had meetings with the stock markets several tunes and “I want to assure the people of the country that we are ready to deal with any situation and we will not allow anyone with intention to create any irregularities in the market to succeed,” he said on the sidelines of an interactive session on ‘Re-energising the primary equity market,’ organised by ASSOCHAM.

Earlier he made it clear that the SEBI would not budge from its stringent on the corporate governance and the issue of independent directors.

In regard to the SEBI’s new guidelines on protecting the interest of the minority shareholders, Mr Sinha said the market regulator has received a very positive response from the international hedge funds. He asked the corporate to implement the new guidelines wherein the SEBI has to be informed about the corporate structure changes upfront. Instead of grudging the guidelines for protecting the minority interests, the wisdom lie in implementing them because, “in any case we are not going to change; start implementing them in good spirit.”

He rejected the demand for leniency in regard to the mandatory appointment of independent directors. He said finding 5,000-6,000 independent directors in a country of 120 crore people for about 1,000 listed companies should not be a problem.  If finding even this number is difficult, then the country should not aspire achieving 10 per cent economic growth, he asserted.

The SEBI Chairman also asked corporate to introspect whether the pricing of the IPOs in the primary market was right in the backdrop of a subdued conditions for raising resources through this route. He said only Rs 13,000 crore resources could be raised last year through IPOs while the corporate had to withdraw the intentions to raise as much as Rs 60,000 crore.

He said if the investors lost money as a result of the share getting listed and traded at lower prices then the issue price they would invest.

“More than two-third of shares are trading at below the issue price.” He said adding that the market regulator has dropped the idea of safety net because of strong opposition from the industry.

Speaking on the occasion, Rana Kapoor, President, ASSOCHAM said, “Revitalising the Indian economy by kick-starting growth and investments is the top priority. Taking immediate & bold measures in the short term will stimulate investor confidence. Indian corporates need to revive their animal spirits by expediting investments which are currently sluggish. This will not only help them deleverage, but also invest further in brown-field and green-field projects. International investors are keen to invest in the India story. The Government should also provide policy impetus to create a vibrant equity and debt (both corporate & structured) capital markets in the country with a strong domestic long term bond market with emergence of municipal and infrastructure nods.”