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SEBI on variable action norms against violations: Bajpai

The Securities and Exchange Board of India is working on variable punitive action norms against market operators and corporate promoters in terms of the magnitude of violations committed by them.

SEBI chairman Gyanendranath Bajpai said punitive actions such as penalty or suspension would be an example to others and would be proportionately severe for big violators.

''We need to set different scales of action at various levels of flouts,'' he said.

Bajpai, who became the top boss of the market watchdog about a month ago, has been holding meetings and gathering information from a cross-section of people such as brokers, mutual funds, merchant bankers, chartered accountants and corporate leaders to shape up his action plan and agenda to address various shortcomings of not only the capital market regulator but also of the market participants and its intermediaries.

''My single objective is to build confidence and trust of the common and ordinary investors,'' he emphasised.

While elaborating on his understanding of the capital markets and their present state of operation, Bajpai said he has a four-point wish list to address various ills of the market.

He said the wish list comprised timely sharing of sufficient informations, effective means of educating investors, variable disclosure norms for different sectors of the industry and strict enforcement of ground rules.

''The language and noting of disclosure norms should be very simple and transparent for the understanding of the investors,'' he said and added that this needs implementation of corporate governance in the management of the corporates as well as market intermediaries.

The role of intermediaries such as merchant bankers was very important in respect of proper pricing of shares while making a public offering, he said.

''We are looking at various factors to strengthen the market regulatory function to enhance confidence,'' he said.

While expressing his dislike towards words like 'disclosure', he said there should not be any hidden factors that need to be 'disclosed' by the corporates.

Bajpai said the information sharing system should be sector specific, linked to the nature of operations and growth prospects of the corporates. ''This may vary with the nature of instruments that investors intend to hold,'' he pointed out.

The chairman said disclosures for manufacturing companies would be different from those of a trading company or a dotcom firm.

''Such a differentiation would be required to provide for better undertanding of the investing public,'' he said.

Asked about the multiplicity of stock exchanges on one hand and the expansion of terminal-based trading of National Stock Exchange and Bombay stock Exchange on the other, Bajpai indicated he was open to any idea of consolidating the 23 stock exchanges across the country.

He said efforts would be made towards enabling the small and regional stock exchanges, built over a long period of time to contribute their mite in making markets more efficient.

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