Mumbai: The Securities and Exchange Board of India (SEBI) on Tuesday proposed to control the bull run in the markets by suggesting that Foreign Institutional Investors (FIIs) be restricted from issuing offshore derivative instruments.
Aiming to check flow of funds from unknown entities, SEBI released a discussion paper in which it has sought comments by October 20 on various proposals. The proposals include by barring FIIs and their agents from issuing or renewing ODIs such as Participatory Notes, Equity Linked Notes and Capped Return Notes.
As part of the proposals, SEBI has suggested directing FIIs to wind up their current positions over the next year and a half, during which the regulator would review the position from time to time.
"The year-on-year increase in ODIs, the anonymity that ODIs provide to investors, and the copious inflows into the country from foreign investors has been engaging the attention of the government and the regulators such as RBI and SEBI," the paper said.
The SEBI move comes within days of Finance Minister P Chidambaram expressing surprise and concern about the surge in the markets, saying: "Our assessment tells us that Sensex is driven by copious inflow of funds."
The number of FIIs and their agents issuing ODIs has increased to 34 from 14 in March 2004. The notional value of PNs outstanding has risen from Rs 31,875 crore in March 2004 to Rs 3,53,484 crore as of August this year.
Speaking to PTI, National Stock Exchange (NSE) Managing Director R
H Patil said SEBI’s suggestion was too late to control the markets. "It should have come earlier as the stock market Sensex rise to 18,000-19,000 is unrealistic," said Patil.
Had the SEBI acted earlier, the "stock market bubble" would not have built, Patil told a private television channel. Agreeing that investors will suffer on account of likely plunge in the market, he said, "some people have taken speculative position...let them suffer".
Comments
0 comment