IGF asked to take up deferral products issue with govt

Mukta Malhotra

Mumbai, Aug 3: Individual stock brokers, squeezed between declining volumes and the high turnover tax payable to the Securities and Exchange Board of India (Sebi), have approached the Investor Grievances Forum (IGF) to plead their case to the government to reexamine the ban on deferral products imposed since July 2.

Even as volumes on the bourses rise slowly, increasing institutional business has seen the individual brokers being marginalised, facing sharply lower business from what they enjoyed during the hey days of the badla.

Little wonder, therefore, brokers of both The Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) have approached IGF, which said it will approach the finance ministry and Sebi on behalf of the brokers on both the burning issues faced by the broking community.

Further, IGF said it would also take up the issue on behalf of the small investors who also seem to be losers with the overall behaviour of stock prices which have been badly affected since the ban on deferrals.

Recently, the All India Broker Forum led by Mohan Vijayan and Dina Mehta as also NSE brokers led by Mr Vinod Gupta met IGF and asked it to intervene on their behalf to the finance ministry and Sebi and discuss various alternatives on all the issues related to post-ban of deferral products.

Their contention is that the ban on deferral products has thrown spanner in a vibrant stock market as they were announced and sought to be implemented without taking the participants’ into confidence, without the infrastructure to support the reforms being in place and implemented within an extremely short time.

With volumes having dropped by 75 per cent from about 20 crore, Indian stock markets have been one of the worst performing markets during the past six months, brokers said. The BBF stated that if corrective steps were not taken, a number of stock exchanges would cease to exist.

Members of the BBF felt that growth of any country is linked with the stock market, and therefore, it was essential that the problems of the capital market were not neglected.

In this direction, the forum recommended introduction of deferral products in some form to impart liquidity in the market, liberalising bank finance to stock brokers and investors.

Since accountability of regulators is as important as that of any market participant, they also asked for clear regulations for the same.

They have also maintained that as majority of the reforms like rolling settlements and derivatives require an active electronic fund transfer
facility, permission from the Reserve Bank of India (RBI) should be sought to implement EFT as early as possible. They had also urged that demutualisation and corporatisation of stock exchanges should be expedited.