It is in dialogue with RBI and Finance Ministry, and will come out with a discussion paper soon.
The Securities and Exchange Board of India (SEBI) Chairman U.K. Sinha, on Wednesday, said that the regulator was working with the Reserve Bank of India (RBI) for a formula allowing banks to convert their debt into equity in corporates.
“This will take some more time. But we are in dialogue with RBI and Finance Ministry too. We will come
out with a discussion paper shortly before final implementation,” said Mr. Sinha on the sidelines of the MF Utility launch meeting here.
On algorithm trading, he said that all arguments in favour of algorithm trading had been centred on the fact that it provided liquidity. “More the liquidity in the system, there are lesser chances of any manipulation,” he pointed out.
SEBI was the first regulator globally to come out with a ruling on Algo trading in 2013, he said.
“We provided for higher penalties if there is very high order/trade ratio. This means people are placing orders without any intention of executing those trades. So far we have not come across any such instance. Now other regulators are also looking at it,” said Mr. Sinha. The regulator also announced that algorithms would be tested by stock exchanges. There was resistance from Algo traders and providers. It was intellectual property, and, hence, they could not share it, they argued. So, SEBI came with a view that it was in public interest to test the same from time to time. So, the system was getting tested, Mr. Sinha added.
On distributor commission in mutual funds, Mr. Sinha said, “We have emphasising on both AMCs and distributors that they have to try extremely hard to reach out to the investors. We have not taken any call on the commission structure so far. We are working on it internally.”
