{"id":114943,"date":"2021-06-26T11:02:19","date_gmt":"2021-06-26T05:32:19","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=114943"},"modified":"2021-06-26T11:02:19","modified_gmt":"2021-06-26T05:32:19","slug":"securities-market-on-the-cusp-of-change","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/securities-market-on-the-cusp-of-change\/","title":{"rendered":"Securities market: On the cusp of change"},"content":{"rendered":"\n<p><b><span data-contrast=\"none\">Relevance<\/span><\/b><span data-contrast=\"none\">:\u00a0A robust financial market is critical for optimum channelization of surplus in an economy.<\/span><span data-ccp-props=\"{&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"none\">Synopsis<\/span><\/b><span data-contrast=\"none\">: We need to establish a capable financial market system. One of the challenges is the less than perfect functioning of regulatory bodies.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"none\">Problems with the regulators<\/span><\/b><span data-ccp-props=\"{&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"30\" aria-setsize=\"-1\" data-aria-posinset=\"58\" data-aria-level=\"1\"><b><span data-contrast=\"none\">Concentrated power<\/span><\/b><span data-contrast=\"none\">: Regulators in India are unique in having concentrated power, with an intermixing of legislative, executive and judicial functions.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559737&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li data-leveltext=\"o\" data-font=\"Courier New\" data-listid=\"30\" aria-setsize=\"-1\" data-aria-posinset=\"16\" data-aria-level=\"2\"><span data-contrast=\"none\">Constitutional norms in a liberal democracy are not always in agreement with such kind of extreme power.\u00a0This creates unpredictability for a sophisticated market economy.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559737&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"30\" aria-setsize=\"-1\" data-aria-posinset=\"59\" data-aria-level=\"1\"><span data-contrast=\"none\">There is a major gap in the bond market and its associated elements (the\u00a0<\/span><b><span data-contrast=\"none\">bond-currency-derivatives nexus<\/span><\/b><span data-contrast=\"none\">). These are increasingly holding us back.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559737&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li data-leveltext=\"o\" data-font=\"Courier New\" data-listid=\"30\" aria-setsize=\"-1\" data-aria-posinset=\"17\" data-aria-level=\"2\"><b><span data-contrast=\"none\">Problems with bond market<\/span><\/b><span data-contrast=\"none\">:\u00a0The government needed to vastly increase borrowing when faced with the pandemic, but faced constraints in the resourcing available through the present configuration of the government bond market.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559737&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"o\" data-font=\"Courier New\" data-listid=\"30\" aria-setsize=\"-1\" data-aria-posinset=\"18\" data-aria-level=\"2\"><b><span data-contrast=\"none\">Firms prefer listing overseas<\/span><\/b><span data-contrast=\"none\">:\u00a0Many Indian firms are avoiding the traditional journey of maturity, of an initial public offering in India, and instead opting for overseas ownership\/listing structures so as to avoid the weaknesses\u00a0of the\u00a0Indian institutions, including financial markets regulation.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559737&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"o\" data-font=\"Courier New\" data-listid=\"30\" aria-setsize=\"-1\" data-aria-posinset=\"19\" data-aria-level=\"2\"><b><span data-contrast=\"none\">Shifting of funding from banks to bond market<\/span><\/b><span data-contrast=\"none\">:\u00a0The funding of private firms urgently needs to shift away from banks to the bond market, and this transition has been hampered by policy constraints.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559737&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"30\" aria-setsize=\"-1\" data-aria-posinset=\"60\" data-aria-level=\"1\"><b><span data-contrast=\"none\">Establishing sound foundations of law<\/span><\/b><span data-contrast=\"none\">:\u00a0The present laws are not clear on the objectives, of consumer protection, prudential regulation, resolution, systemic risk regulation and certain specialized elements of securities law such as market abuse.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559737&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li data-leveltext=\"o\" data-font=\"Courier New\" data-listid=\"30\" aria-setsize=\"-1\" data-aria-posinset=\"20\" data-aria-level=\"2\"><span data-contrast=\"none\">The vagueness of objectives in the present law confuses the officials working on financial regulation, and creates uncertainty for the industry.<\/span><b><span data-contrast=\"none\">\u00a0<\/span><\/b><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559737&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"o\" data-font=\"Courier New\" data-listid=\"30\" aria-setsize=\"-1\" data-aria-posinset=\"21\" data-aria-level=\"2\"><b><span data-contrast=\"none\">Example<\/span><\/b><span data-contrast=\"none\">:\u00a0As an example, the present law on market abuse, the\u00a0Sebi\u00a0Prohibition of Fraud and Unfair Trade Practices Regulations, confers unbridled discretionary penal powers in the hands of Sebi, and creates corresponding regulatory risk for private persons.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559737&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"none\">What steps can be taken?<\/span><\/b><span data-ccp-props=\"{&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">Reforms aimed at consolidating and unifying the following can help:<\/span><span data-ccp-props=\"{&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"31\" aria-setsize=\"-1\" data-aria-posinset=\"61\" data-aria-level=\"1\"><b><span data-contrast=\"none\">Financial Sector Legislative Reforms Commission (FSLRC) material<\/span><\/b><span data-contrast=\"none\">\u00a0on the working of regulators, including the role and composition of the board, refreshed and updated, reflecting the 2015-2021 experiences on the ground.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559737&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"31\" aria-setsize=\"-1\" data-aria-posinset=\"62\" data-aria-level=\"1\"><b><span data-contrast=\"none\">Clarity of objectives\u00a0<\/span><\/b><span data-contrast=\"none\">of\u00a0financial market\u00a0regulation where the FSLRC work is broadly\u00a0complete.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559737&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"31\" aria-setsize=\"-1\" data-aria-posinset=\"63\" data-aria-level=\"1\"><b><span data-contrast=\"none\">Financial agency architecture s<\/span><\/b><span data-contrast=\"none\">urrounding the bond-currency derivative nexus and Public Debt Management Agency\u00a0<\/span><b><span data-contrast=\"none\">(PDMA<\/span><\/b><span data-contrast=\"none\">), which involves continuing the reforms announced in the 2015 Finance Bill and later withdrawn.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559737&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"none\">Source<\/span><\/b><span data-contrast=\"none\">:\u00a0<\/span><a href=\"https:\/\/www.business-standard.com\/article\/opinion\/securities-market-on-the-cusp-of-change-121062401631_1.html\"><span data-contrast=\"none\">Business Standard<\/span><\/a><span data-ccp-props=\"{&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Relevance:\u00a0A robust financial market is critical for optimum channelization of surplus in an economy.\u00a0 Synopsis: We need to establish a capable financial market system. One of the challenges is the less than perfect functioning of regulatory bodies.\u00a0 Problems with the regulators\u00a0 Concentrated power: Regulators in India are unique in having concentrated power, with an intermixing&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/securities-market-on-the-cusp-of-change\/\">Continue reading <span class=\"screen-reader-text\">Securities market: On the cusp of change<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,8043,9],"tags":[8259,8257,8256,8254,8253,8258,8255],"class_list":["post-114943","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-current-affairs-cat","category-public","tag-bond-currency-derivative-nexus","tag-bonds","tag-derivatives","tag-financial-market","tag-fslrc","tag-pdma","tag-securities","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/114943","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=114943"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/114943\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=114943"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=114943"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=114943"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}