The International Monetary Fund (IMF) has suggested that the Securities and Exchange Board of India (SEBI) focus on strengthening the supervision of securities market intermediaries, including fund managers.

A study conducted by the IMF, India: Financial Sector Assessment Program – Detailed Assessments Report on IOSCO objectives and principles of securities regulation, has said that the regulatory and supervisory regime for securities market in the country is well developed and largely in compliance with international standards. IOSCO is the International Organisation of Securities Commissions.

However, the report also said that a few general pre-conditions for effective regulation of the securities markets requires further strengthening.

Releasing the report on Monday, which was published by IMF last week, SEBI said that one of the challenges faced by the authorities was the sheer number of the intermediaries operating in the securities market. SEBI said that onsite inspections of brokers were primarily a responsibility of the stock exchanges.

“The stock exchanges have developed a risk-based approach to determine the intensity of the inspections. Theme-based inspections have been carried out by SEBI in respect of market intermediaries, mutual funds, depositories, stock exchanges, etc.” SEBI said that it welcomed the recommendations of the report which also suggested that the legal backing of the clearing and settlement process be improved by addressing the issues of finality and netting at the level of law. SEBI had already taken action to recommend amendments to the Securities Laws to provide for finality of settlement obligations and netting.

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