The Securities and Exchange Board of India (Sebi) is putting in place a framework

RELATED ARTICLES Sebi asks firms to disclose details of utilisation of warrants Sebi to give MCA names of over 500 cos who violated CIS rules Sebi seeks external consultant for overhaul of role, structure Sebi opens new window for promoters to dilute stake Sebi imposes Rs 40 lakh penalty on four individuals

to regulate mutual fund distributors, its executive director K N Vaidyanathan said on

Tuesday.

“We will be regulating the distributors. We are tightening the process; the way they sell mutual fund products,” he said at the Ficci Capital Market Summit in Mumbai. “Every component of capital markets has to be regulated,” he added.

He said Sebi was coordinating with the Association of Mutual Funds in India (AMFI) to end “mis-selling” of products.

He said the mutual fund certification exam, which is now conducted by AMFI, would be moved to the National Institute of Securities Market in June and AMFI would focus on “right selling, code of conduct and ethics”.

Vaidyanathan asked mutual funds companies to “walk the talk” and adopt investor-friendly steps. He said none of them has written to investors to explain how they would benefit from Sebi’s decision to ban entry loads. This would have helped mutual fund investors who wanted to know about upfront loads on other financial products, he added.

C B Bhave, chairman of Sebi, said there was scope for expansion through diversification of products in the stock market. But, he said, sensibilities of the investor should be kept in mind.

“We cannot simply exist in a world of caveat emptor (let the buyer beware). There is a need for increased responsibility,” Bhave said in his keynote speech at the summit.

Bhave said Indian companies would start adopting the new IFRS accounting regime from April 2011.

“The language of accounting needs to be the same across the world if investors are to make comparisons between companies across the world. This will be ensured to a large extent through the implementation of IFRS,” he said.

On cost of transactions, Bhave said Indian markets were one of the most efficient in terms of impact costs, but a lot needed to be done in terms of brokerage costs. Similarly, while volumes are large, ticket size of transactions remains small, which puts pressure on costs.

Sebi chairman said the regulator went by data rather than the impressions of people while formulating policy. “It is for this very reason that Sebi tries to put as much data as possible on public domain,” he said.