Sebi advises retail investors to come through institutions

By: | Published: December 3, 2015 1:02 AM

Sebi chairman UK Sinha said the regulator is in dialogue with RBI, Irda and the government to bring in a single KYC system for the entire financial sector.

Reacting to the muted response by retail investors in the recently concluded initial public offerings (IPOs), Securities and Exchange Board of India (Sebi) chairman UK Sinha on Wednesday said the regulator was not worried and instead advised such participants to invest in IPOs through institutional investors like mutual funds.

Sinha also emphasised that the regulator has put in place all necessary measures to check any manipulations in the primary markets, even as various attempts have been made in the past to manipulate the IPOs.

“I don’t mind if retail investors don’t participate in the IPOs because I would rather like them to participate through institutional investors,” Sinha said on the sidelines of a financial empowerment conference organised by investment planning platform 5nance.com.

“All over the world, including in India, retail participation historically has been primarily for getting in early. If retail is not participating, we shouldn’t worry about it as long as people come into the market (through other routes) and long-term interests are protected,” he added.

Talking about various other initiatives, Sinha said ‘trust, ease and convenience as well as investor education’ can help bring in more people into the securities market. He also said Sebi has an integrated surveillance department which is regarded as one of the best in the world.

“We generate about 100 alerts every day and each and every alert is followed. On an average, out of these 100 alerts about 10 alerts are taken to the next stage (of probe) and many of the things have been initiated because of the surveillance mechanism,” Sinha said.

With the help of this mechanism, Sinha said over 900 companies have been banned by Sebi for misusing stock markets for the purpose of tax avoidance and the action in these cases have been taken by the regulator on its own without being asked by the tax authorities.

Noting that Sebi has simplified know-your-client process for investors, Sinha said the regulator is in dialogue with RBI, Irda and the government to bring in a single KYC system for the entire financial sector and is optimistic that the same would be implemented.

He also reiterated that Sebi is looking into the possibility of providing mutual fund schemes through modern platforms such as e-commerce.

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