Mumbai: Capital market regulator Securities and Exchange Board of India (Sebi) on Wednesday released a discussion paper proposing to impose restrictions on outsourcing activities by various market intermediaries.
Such intermediaries including mutual funds, portfolio managers, depository participants, bankers to an issue, merchant bankers, registrar and share transfer agents and stock brokers.
Since the intermediaries are registered based on their strength, outsourcing of key activities by them to unregistered third parties defeats the purpose of regulation, Sebi said.
Key activities crucial to the intermediation service may be delivered by the intermediary itself, it said.
Informal feedback indicates that compliance with securities laws, investor grievance redressal and know your customer norms must not be outsourced under any circumstance, the discussion paper said.
The market regulator listed a number of activities that should not be outsourced by the intermediaries.
Sebi has sought public comments on the proposal by 5 February.