Sebi to consider self-regulatory body for financial advisors

Sebi to consider self-regulatory body for financial advisors
Comment E-mail Print Share
First Published: Mon, Aug 20 2007. 07 14 PM IST
Updated: Mon, Aug 20 2007. 07 14 PM IST
New Delhi: Market watchdog Sebi is likely to consider later this week the appointment of a self-regulatory organisation (SRO) for financial advisors like broking houses, financial advisory firms and chartered accountants.
“In its meeting on 22 August in Mumbai, the Sebi Board is likely to consider the proposal of SRO for investment advisors. In the second stage, the government may bring a separate Act in the Parliament for this purpose,” an official source told PTI.
However, Sebi is expected to spare print and electronic media from the proposed regulations at the moment.
At present, many brokers and sub-brokers who trade in shares, insurance, banking products or mutual funds also advise investors to buy or sell these products through various channels, but without any regulatory control.
There have been allegations that some of them advise to maximise own interests, and not in a professional manner.
“All the investment advisors will have to register with the SRO, and technically with Sebi also. But Sebi will not interfere in its day-to-day functioning,” the source said.
The SRO will have representatives from all categories of advisors. It will have to evolve on its own by drafting a code of conduct to offer professional advice with a sense of responsibility.
Sources said Sebi had earlier written to other regulators like the Reserve Bank of India and the Insurance Regulatory and Development Authority, seeking to know if they would like to associate themselves with the SRO as and when it is set up.
However, it may proceed alone for the time being. They also pointed out SRO will not be set up as a sort of watchdog within the regulatory body. Initially some Sebi officials may be sent on a deputation to work for SRO for some time to generate investors’ confidence in the organisation.
At the operational level, the SRO would have to hire people from the market to undertake the work of inspections. Sebi will also contemplate the possibility of making available some of its middle level officers on deputation basis to the SRO for definite period in order to get it started.
However, in view of strong opposition from electronic and print media, Sebi has decided to exempt the investment advisors working with them.
The Sebi board is also likely to take up the issue of delisting of companies through reverse book building norms, the sources added.
Comment E-mail Print Share
First Published: Mon, Aug 20 2007. 07 14 PM IST