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Sebi may make PAN disclosure compulsory

Rakesh P Sharma & Janaki Krishnan

The Securities Exchange Board of India is planning to make declaration of permanent account number compulsory for all stock market transactions.

PAN is being seen as a solution to move towards uniform client code identification.

The issue was discussed at a recent meeting of the risk management committee of the regulator, but sources said no consensus was arrived at.

The committee is also learnt to have cleared the proposal to remove margins on foreign institutional investors, which was imposed last year in March in the aftermath of the crisis, which gripped the stock markets.

Some of the FIIs were found to be guilty of colluding with local brokerages to create an artificial market in some scrips.

Senior officials at Sebi refused to comment on both the issues saying nothing had been finalised yet.

It may be recalled that the need for a uniform client code has been the demand of the market for a long time, since it provides the perfect solution against a client taking huge exposures through several brokers across exchanges.

At present, different exchanges maintain different codes for brokers and clients.

Stock exchange sources said the issue of PAN had gained currency with the Income Tax department speeding up the process of issuance of the cards. "This would serve as the ideal identification aid," they said.

Meanwhile, the Sebi risk management committee felt the imposition of margins on FII trades had served its purpose and since there is no longer any need for it, it may be done away with.

FIIs had not really created any issue over the imposition of margins and there was no significant impact on their trading pattern after the move.

Prior to last year, FII trades were not subject to margins as the idea was to encourage them to invest more in Indian equities.

Sebi is expected to come out with circulars to the stock exchanges on both these issues shortly.

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