The Securities and Exchange Board of India on Saturday said it would introduce regulations to rein in unscrupulous investment advisors and set up a committee to look into various aspects for developing the derivatives market.

"A large number of investors are guided by different kinds of investment advisors offering advice through different channels of communications. With regard to the need for expertise as well as responsibility in the advisory function, we have decided to frame regulations for investment advisors on a priority basis," Sebi chairman M Damodaran said after a marathon seven-hour board meeting.

In doing so, the market regulator will be guided by the experience gained in protecting investors in other countries.

"Is it advice, driven by expertise or driven by an agenda?" Damodaran said.

The Sebi will soon set up a small expert committee to express its views on developing a vibrant derivatives market.

It will also take a call on its primary market committee's proposal for compulsory grading of initial public offers after taking inputs from a pilot project on optional rating of public issues.

"We have decided to constitute a small committee of experts to make a thorough study of various aspects of the derivatives segment, suggest changes and also identify new products that ought to be introduced in the Indian securities market," the chairman said.

The committee will consist of Sebi representatives, financial market experts and academia, and will submit its report as quickly as possible.