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Sebi to tighten norms for private placement

Sebi is planning a slew of measures like T+1 settlement system, compulsory rating and demating of private placements of debt papers and mandatory corporate governance for credit rating agencies as part of the capital market reforms drive.

The regulator would also launch a new electronic data filing of information and retrieval system on July 5 to enable investors to obtain relevant informations of companies, Sebi chairman G N Bajpai told reporters on Thursday.

Pointing to the spate of private placement totalling Rs 570 billion between October-March, Bajpai said "most of them were deemed public issues, but their disclosures were inappropriate. I would strongly recommend compulsory rating along with disclosures."

The Sebi chief also favoured compulsory demating of the privately placed debt instruments in line with government securities to prevent scams. "If these issues are not addressed then it will put investors' confidence into difficulty," Bajpai said.

On the equities side, the market watchdog is planning to introduce a new system where security transactions would be compulsorily settled one day after the transaction date (T+1 system) as against the current practice of T+3 system.

"We are planning to move from a T+3 to T+2 system next fiscal and eventually be the first country to introduce a T+1 system in 2004," Bajpai said, adding it can be implemented after real time gross settlements are possible.

Sebi also intends to make it mandatory for credit rating agencies like Crisil, ICRA and Care to comply with the corporate governance norms.

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