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SEBI defers decision on badla to May 14

Our Bureau

MUMBAI, May 5

THE much-awaited decision on whether or not badla is to be banned from July 2 was put on the back burner with the capital markets regulator rescheduling its board meeting to May 14.

Confirming this, Mr D.R.Mehta, SEBI Chairman, said, ``such important decisions cannot be taken without the presence of the full board''.

A SEBI panel had last week recommended ban on all deferral products such as ALBM, BLESS and also the rolling carry forward products. It had also suggested introduction of derivatives on individual stocks such as options and futures from July 02. These re commendations were to be put up to the board for approval.

It is reliably learnt that the absence of Mr Kumar Mangalam Birla, Chairman Aditya Birla Group and Mr Rakesh Mohan, Economic Advisor to Ministry of Finance led to the meeting being deferred.

Mr D.R.Mehta, Prof. J.R. Varma, Mr S.P.Talwar Deputy Governor RBI and Mr Govindrajan, secretary, DCA, were present at Saturday's meeting.

In an informal chat with the media, Mr L.K.Singhvi, Senior Executive Director, SEBI, said that the new guidelines on creating an internal framework of compliance at every level in order to prevent or minimise insider trading would also be put up for app roval to the board at its next meeting.

In a bid to tighten insider trading norms, the SEBI group on insider trading had prescribed a code of internal procedures and conduct for listed companies and for entities associated with the capital market.

Once approved by the board, the SEBI Insider Trading Regulations of 1992 would be amended to incorporate these guidelines. This will be the first time since 1992 that the regulations are being amended.

The SEBI board however approved implementation of

a stringent code of ethics for elected directors and functionaries of stock exchanges to create fair and transparent practices. As per the stipulated code, the President, Vice-President and elected directors will not be allowed to do proprietary trades d uring their tenure in office.

Other directors or functionaries on board will have to mandatorily disclose their trades to a designated committee of the board.

However, in the light of the Ministry of Finance's decision to move towards demutualisation, is such a code essential?

Senior SEBI officials maintain that the code is not restricted to broker directors of exchanges alone but extends to all `stock exchange' functionaries.

The code also covers areas such as general standards to be followed by elected directors and functionaries, disclosure of dealings in securities by them, that transactions be of an investment nature and not speculative, avoidance of conflict of interest, disclosure of beneficial interest, role of president and elected directors in the day-to-day functioning of the exchange, access to information, misuse of position, press and media coverage and compliance with laws etc.

The final code is to be formally circulated in the next couple of days.