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'No FII has disclosed participatory notes details'

"There has been no scam," asserts D R Mehta, chairman, Securities and Exchange Board of India.

"Were the markets ever closed for even a single day? In certain cases, there were irregularities and in others, aberrations," he says.

Maintaining that there was no scam on the bourses, notwithstanding the constitution of the Joint Parliamentary Committee to look into it, Mehta feels that the bourses have hit the bottom and can only go up now.

Excerpts from an interview with P Vaidyanathan Iyer.

The department of divestment has sought a relaxation in pricing of open offers by a strategic partner which acquires stake in a public sector undertaking. Is it in the offing?

It is a question of how to harmonise the regulator's mandate of investor protection with economic reforms. Definitely, divestment of PSUs will bring in more value scrips and further increase market capitalisation. The issue, however, needs to be discussed at length. It was discussed in the board meeting on November 1, which was, however, inconclusive. We will take it up again in the next board meeting.

Private placement offers of companies have often been at exorbitant prices...

The government circular of December 2000 states that private placements with more than 50 subscribers only come under the Sebi purview. If there are less than 50 subscribers, it comes under the department of company affairs' ambit.

Are you sticking to your original view that overseas corporate bodies should be barred from the markets?

Almost Rs 38 billion has been taken out from the market by OCBs. We stand by our earlier observation on OCBs. The issue was discussed at the high-level capital market committee meeting on Monday. The Reserve Bank of India is likely to issue the notification on investment and disclosure norms for OCBs.

What about the role of certain foreign institutional investors which took the participatory note route for investing in the bourses?

We have ordered that FIIs should announce and disclose any such issue of participatory notes to their clients. But since the order was issued, none of the FIIs have disclosed it.

What is your perception of the threat, if any, on allowing trading in 31 individual stock futures?

The stocks in which futures have been allowed are highly traded. Further, they are only a handful and hence can be easily monitored. We will decide on including new scrips only after we are convinced about the safety measures taken by the exchanges. Both the Bombay Stock Exchange and the National Stock Exchange are likely to start trading in stock futures before Diwali.

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