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October 23, 2007 18:51 IST
Two days before the Securities and Exchange Board of India is to take a crucial decision on curbing participatory notes, a petition was filed in the Supreme Court on Tuesday to restrain the market regulator from implementing the proposals.
On October 16, Sebi proposed to ban derivatives-based participatory notes in 18 months and put curbs on such instruments based on Foreign Institutional Investors' assets under management. Its board would meet on October 25 to take a decision on its proposals, which is expected to be made into regulations.
A retail investor from Karnataka, J R Narayana, has sought to restrain Sebi from implementing the proposal to curb FIIs from issuing Offshore Derivative Instruments. Narayana also sought a direction to the Finance Ministry and Sebi not to implement the proposal merely on the basis of comments received up to October 20.
According to the petitioner, Sebi had sought comments in four days on the proposed reversal of a trend that has been continuing for almost 15 years. He further alleged that a large number of investors, including himself, had been wrongfully prevented from making any comments in view of the short time span for receiving public comments.
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