Sebi chairperson Madhabi Puri Buch on Wednesday said the capital markets regulator is working on an ASBA-like facility for secondary market transactions as well.
Speaking at the Global Fintech Fest here, Buch said in an initial public offering (IPO), the Application Supported by Blocked Amount (ASBA) system helps ensure that money from an investor gets moved only when an allotment happens.
“We are now actively engaged in looking at ASBA-like (facility) for the secondary market. So if that can be done for the primary market, why can’t it be done for the secondary market?” Buch said.
At present, the investor parks money with the broker, ensuring that the middleman gets a float, whereas an ASBA-like facility will take away the money from such entities.
Buch said the moves like ASBA for secondary market are aimed at reducing “structural vulnerabilities” in the system and asked fintech players to avoid a few things in their business models.
“If your business model is such that it is going to increase concentration risk or structural vulnerability, chances are that sooner or later the regulator will move to eliminate,” she said.
The Sebi chief also said that any business model that relies on a black box not open to sunlight, where its offering or claims cannot be audited or validated, will not be permitted.
She also said since data is a public infrastructure or a public good, any attempt by any private party to own it or monetise it, will not be permitted.
Buch said startups should build themselves on public infrastructure like Aadhaar and make best use of them to build business models, which would be helpful.
Sebi chief also spoke about the capital market regulator’s views on algo trading, saying the regulator is neither for or against the activity.
She said Sebi would insist on transparency and sufficient disclosure from companies, and then leave it to the individual investors.
While designing a product or a service, efforts should also be made by companies to avoid barriers to exit for an investor, she said.
Sebi will be increasing its investments on the technological tools for upping its surveillance capabilities, she said. The Sebi chief said cyber security is also important and there will be more emphasis on the same going forward.
No business should look at building anonymity in the system or have anything which does not meet the expectations on transparency, Buch said, making it clear that any such proposals will not make the regulatory cut.