Perturbed over rising incidents of insider trading, Securities and Exchange Board of India (SEBI) Chairman U. K. Sinha, on Tuesday, said the market regulator was setting up a committee to revisit norms on the issue.
“We have regulation for prevention of insider trading. We have now decided to set up a new committee to re-look at entire regulations. So, the entire insider trading regulation will be revisited,” Mr. Sinha said.
“Like we had revisited the takeover code, similarly the insider trading regulation will also be revisited,” he said after the opening of new local office for SEBI here.
The committee would observe the practices that were followed in other parts of the world and would come out with its recommendations on insider trading by next year, he said.
The SEBI Chairman said the regulator does not need any additional powers at the moment but if the committee recommends, the regulator may seek an amendment in the Act.
“We are not looking at more powers from the government. However, if the committee recommends that there is certain lacuna in the SEBI Act, then we will take up with the government. Right now I cannot say whether I need new amendment from the parliament,” Mr. Sinha said.
Asked about the recent trend of price erosion below the IPO (initial public offer) price after listing of companies, he said the proposed guidelines on the safety margins for small inventors in the IPO would be finalised shortly.
SEBI last year floated a discussion paper on the subject and had received comments, he said.
“In the next one month or so, we would like to close this and take final call on this. We want small investor who is investing in the primary markets is protected,” Mr. Sinha said.
According to him, shares of one third of the companies which have gone for IPO in the past two year are now being traded below the offer price.
The market regulator has opened its local office here as part of its efforts to reach out to investors across the country.
As part of its decentralisation of work to regional offices, the SEBI was opening new local offices in different regions of the country.
SEBI is looking to strengthen its regional offices since physical proximity of the regulator’s office to investors and intermediaries would promote deepening and broadening of the securities market.
Besides its headquarters in Mumbai, the regulator has local offices in Indore, Bangalore, Guwahati, Bhubaneshwar and Jaipur. It has regional offices in Chennai, Delhi, Kolkata and Ahmedabad.
