MUMBAI, February 14: A fresh round of controversy has plagued the LC Gupta committee on derivatives with SEBI contesting the committee chairman's claim that it was only required to lay down the policy framework and not recommend the exchange-related rules and regulations.On the other hand, senior SEBI officials have also questioned the rationale behind LC Gupta's move to submit the first part of the report to the market regulator without even getting the signatures of each of the 20-plus members which form the unwieldy committee.
SEBI sources told The Financial Express that the mandate given to the committee was very clear in that it asked it "to develop appropriate regulatory framework for the introduction of derivatives trading in India".
"It is wrong to say that the committee was not required to go into the regulatory aspect. We did not set up such a huge committee to merely get an academic report on whether we should have derivatives or not," said a SEBI source.
Admitting that the processhas taken far too long than it should have and that too when the real issue of regulatory measures to be adopted is yet to be addressed, SEBI sources said that the first part of the report has been submitted to the regulator without the signatures of all the members of the committee.
It is learnt that this was done to avoid any further delay in submission of the report, but SEBI authorities feel that it is incorrect to take up a report for further action if the members of the committee have themselves not endorsed it.
They allege that a similar situation had arisen when the draft report was submitted to SEBI.
"Even then the endorsement of all the members of the committee was not taken," said a SEBI source.
SEBI officials are now drawing a parallel to the Justice Bhagwati report on takeovers where the policy framework as well as a detailed regulatory structure was recommended.
The delay in the committee's completion of the report has in fact miffed even the committee members. While some have blamedSEBI for the delay, some others feel that having an unwieldy committee has led to the delay.
"Our idea of having such a huge committee was to be very sure of what we are getting into. Derivatives are dangerous instruments if not used carefully and we did not want to take a chance. Several foreign experts were flown down to offer their comments and suggestions," said a SEBI source.
Gupta had, a few days before submitting the first part of the report, asked members to submit their final views on the subject at the earliest. He had also questioned the contention of BSE president MG Damani to suggest in his dissent note that the committee was required to look into exchange level rules and regulations as well.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
