vii. Assessment and Prospects

During the year under review, the SEBI took several measures for modernising the securities markets and making them more fair, transparent and efficient. To this end the SEBI had carried out extensive reforms and reviewed its existing policies and regulations in primary market, secondary market, mutual funds, foreign institutional investments, takeovers and depositories. The SEBI had also stepped up its efforts to protect the integrity of the markets through various risk containment measures, surveillance mechanisms and enforcement actions. All these measures together had helped the SEBI assure a greater level of protection to the investors.

In the coming years, not only will the role of the securities markets in the economy increase but also these markets will become more integrated with the other financial markets namely - money market and forex markets. There would also be increasing level of global integration. All this will call for a greater degree of co-ordination between the SEBI, RBI and the Government as also a further strengthening of the regulatory framework so as to sustain investor confidence and attract a growing pool of investors.

In short and medium terms the SEBI intends to take the following initiatives -

• activate trading in bonds and debentures and take all necessary measures including co-ordinating with relevant agencies for this purpose;
• implement the recommendations of the L C Gupta Committee appointed by the SEBI on Derivatives and introduce derivative trading on the stock exchanges;
• give impetus to stock lending for which guidelines have been issued by the SEBI but the activity is yet to pick up;
• take steps to revive the OTCEI by making changes wherever necessary in the systems, procedures and policies of OTCEI;
• facilitate market making system;
• strengthen investor protection funds in the stock exchanges;
• take measures to implement the recommendations of Chandrasekaran Committee on the issues relating to transfer and registration of securities;
• give impetus to dematerialisation and book entry transfer;
• consider shortening of settlement cycles and move towards rolling settlement and DVP on the lines suggested by the Group of Thirty;
• take measures to further streamline and shorten issue procedures with a view to reducing the cost of issues;
• prescribe regulations on collective investment schemes;
• prescribe regulations for credit rating agencies;
• take follow up action on the recommendations of the Justice Dhanuka Committee on securities laws;
• further refine the takeover regulations in the light of experience on takeovers during the year under review;
• strengthen further the regulations for mutual funds so as to ensure their continued growth and enhance the level of investor protection;
• take follow-up action on the recommendations of the P K Kaul Committee on the manner in which trustees of mutual funds could function effectively;
• implement the recommendations of the report on mutual funds investing in overseas markets;
• further strengthen the surveillance mechanisms at the stock exchange level and within the SEBI;