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Assessment and Prospects

At present, Indian securities markets are passing through an important phase. The Indian corporate sector and the securities industry and the securities markets are changing rapidly in the face of economic reforms. As the Indian economy undergoes structural changes, and opens up to domestic and international competition, trade and investment; financial intermediation through household investment in stocks, bonds and mutual funds units, which is still a relatively small proportion of household savings compared to developed markets will have to fast become the investment channel of choice for the household sector. It is only when this happens will the securities markets be able to provide the long term resources for industry and the economy. For this to happen, it is important to build a regulatory system which would inspire the confidence of investors.

In the short and medium term efforts will have to be made to follow up and further consolidate progress made on initiatives taken by SEBI. SEBI intends to:

  • consolidate and revise of the Guidelines for Disclosure and Investor Protection
  • take follow up action on the recommendations of the Justice Dhanuka Committee on securities laws
  • take measures towards the implementation of the recommendations of the Chandrashekaran Committee, on issues relating to the transfer and registration of physical securities
  • prescribe regulations for credit rating agencies
  • take follow up action towards the introduction of derivative trading on the basis of the report of the Dr. L C Gupta Committee, which is expected to be submitted in the course of the coming year
  • further improve disclosure norms, streamline and shorten issue procedures so as to reduce issue costs for Indian issuers
  • make efforts in the direction of modernisation of the market infrastructure to ease clearing and settlement difficulties so that settlement cycles are shortened and our markets move towards rolling settlement and DVP on the lines suggested by the Group of Thirty.

The present regulatory regime for the securities markets established under the SEBI Act 1992, has led to improvements in standards of investor protection. At the same time a number of challenges remain and there is a scope for potential further improvements and greater efficiency in the regulatory system. Some of the measures that SEBI proposes to take in this direction are mentioned above. As the changes and reforms brought in by SEBI get bedded in and markets mature, it is expected that Indian securities markets will take up their rightful role in the Indian economy.