Mumbai, July 9: The Institute of Chartered Accountants of India (ICAI) has constituted a five-member committee to formulate derivative accounting norms for brokers and corporate bodies involved in derivatives trading. The panel has been set up following recommendations of the Securities & Exchange Board of India.Harish Motiwalla, chartered accountant and a member of this committee, told The Financial Express that the committee comprises chartered accountants and emminent professionals associated with the capital markets. LC Gupta, chairman of the Sebi panel on derivatives, is also a member of the panel.
The committee will soon start its deliberations on the accounting treatment of derivatives and related disclosure norms. It will submit the report by September. These accounting norms will be tested and put into place before derivative trading -- starting with stock index futures -- can start in India.
Motiwalla emphasised that the study group will also look into ensuring transparency of theoperations and investor protection. Though the detailed brief for the committee has not been chalked out, sources point out that the panel will be evolving a standard for reporting of derivatives and the margins in the books of account of the corporates involved in derivatives trading.
Among other things, the committee is also expected to go into standards for transactions conducted on a daily basis.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
