Role of SEBI
Let us break some myths:
1. SEBI is here to protect the small investor: Well tried! Nobody is here to protect the small investor, but to keep the small investor a facade has to be created. So along with MCA, ROC, IRDA, CLB, ..one more body was needed to complete the alphabetic soup so the alphabets S, E, B and I have been included.
2. All information is available on the SEBI site: I dare you to find the list of brokers who have been prosecuted – surely even they cannot find it. It is an old trick. If some body asks you for information give it in such a muddled form – a 500 page report with references, clauses, sub-clauses.
3. They take suo moto action on insider trading: It is the stock exchanges who have the data scanning ability to find a pattern in things like insider trading. The regulator sadly lacks the technical ability to spot and find a pattern in the trades and prices.
4. They do very investor friendly things: If insisting that the shareholders should get the full copy of the balance sheet is a good step, then you may be right, but I am not sure. One prominent industrialist said ‘let people ask for a full report’ rather than send it as a default option. SEBI said NO. So all of us get big, bulky balance sheets and 99% (I am sure that I will not need to change it from here) of us who receive it will chuck it out without reading it…sad but true.
5. Removing the entry load is a fantastic thing for the small unit holder: Well the small investor (what ever it means) is likely not to get any service from the vanishing distributor. It is likely that he/she will go to the net and make and investment or go to a broker and pay brokerage instead of an entry load 🙂
aaj ke liya itna panga bas…:(
Muthu
Regulator seems to be interested only in regulating, not in growth. Over regulation would either kill or stunt the industry.
There are only around 8 to10 million investors in mutual funds. A mere Rs.2 Lakh crore of equity assets is managed by the mutual funds industry.
In April to June’10 quarter, only 30.9 lakhs entities (including individuals) participated in the Indian stock market. 3 million out of 1150 million, 0.26% of the population!
Out of the above data, the majority of the volumes would have come from few thousand FIIs.
60% of the volumes done everyday in the stock markets are intraday. The majority of the remaining volume would have investment tenure of a week to few months. Asking a stock broker to promote long term equity investments is one big tragic joke.
In a country which is having a 30 crore middle class, hardly 3% of them have exposure to equity markets.
Let us merrily keep regulating on and on. Why we should stupidly worry about growth and spreading equity awareness.