Indian market has undergone major changes: SEBI tells IOSCO

"SEBI has built the reputation of a credible enforcement agency. The level of enforcement action taken by SEBI is very high," the Indian regulator said

January 01, 1970 5:30 IST | India Infoline News Service
In its detailed assessment report on Indian stock market, the International Organisation of Securities Commissions (IOSCO) had suggested that SEBI should strengthen the stress-testing procedures of the central counter parties (CCPs) and should improve the liquidity risk management.

Releasing the IOSCO report, SEBI on Monday said that it has initiated the process to strengthen the stress testing procedures of CCPs. SEBI also said that it is carrying out theme-based inspection of various market intermediaries, mutual funds, depositories and stock exchanges among others.

"SEBI has built the reputation of a credible enforcement agency. The level of enforcement action taken by SEBI is very high," the Indian market regulator said.

"SEBI has used warnings and letters of deficiency to address findings from inspection reports, although in a few cases 'harder' measures, such as disgorgement and payment of money under adjudication or consent proceedings, have been imposed. The enforcement actions taken by regulator are very high compared to other jurisdictions," it added.

Regarding mutual funds, SEBI has taken several steps to re-energise the industry, to increase product penetration especially in smaller towns, for regulating distributors and issues concerning investor protection and mobilisation of household savings for the growth of the economy.

The comprehensive guidelines for registration and supervision of mutual funds has been issued by the Indian regulator by way of SEBI (Mutual Fund) Regulations, 1996. The supervision system of mutual funds is a two-tier system, i.e., supervision by trustees on one hand and SEBI on the other hand. Mutual funds are required to periodically report their activities to SEBI and a risk-based approach is followed for periodic inspections.

In the respect of better auditing and accounting standards in the securities market, SEBI said the Companies Act and Chartered Accountants Act provides a framework to maintain objectivity and integrity of accounting and audit. Besides, central government has set up Quality Review Board (QRB) for reviewing the quality of auditors.

The Companies Act, 2013 contains provisions for establishment of an independent quasi-judicial agency, the National Financial Reporting Authority, to oversee the functions of auditors and to ensure scrutiny and compliance with accounting and auditing standards, SEBI noted.

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