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Root Out Insider Trading From Markets: PM To Sebi

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Asking Sebi to work towards rooting out the "disease of insider trading" from stock markets, Prime Minister Manmohan Singh on Friday, 24 May 2013, said the government is committed to doing the needful to strengthen the regulator's enforcement powers.

The Prime Minister also favoured making it easier for foreign investors, including central banks, sovereign wealth, university and pension funds, to invest in India.

"Our government remains committed to doing everything that is needed to strengthen Sebi so that it can deliver even more effective enforcement," the Prime Minister said while speaking at a function to mark Sebi's 25 years of existence.

"Sebi's future effectiveness will be its ability to root out the hard-to-define but extremely pernicious disease of insider trading," Singh said.

While Sebi started functioning as an independent regulator in 1988, it got statutory powers only 1992 through Sebi Act when Singh was the Finance Minister in Narasimha Rao government. It was around that time country's biggest stock market scam broke out, involving rogue broker Harshad Mehta.

Sebi got more powers in 1995 and again 2001-2002, this time after another scam involving Ketan Parekh came to light.

The Prime Minister said: "Mobilisation of household savings into productive investment in the capital market must be a key goal for everyone in the financial sector."

It may be noted that Singh himself had headed banking regulator Reserve Bank during 1982-85.

"Higher savings and investment rates are most productive when there is effective intermediation through well functioning capital markets," he said.

"The high growth rates that the economy has witnessed in the last decade or so have been driven by enhanced savings and investment rates.

"A number of steps have been taken to attract retail investors into the market such as introduction of Rajiv Gandhi equity savings scheme," he said.

The Prime Minister said investors are more empowered today than ever before because of the availability of a large amount of relevant information.

"It is a matter of pride that the Indian stock exchanges today rank among the best in the world in terms of technology.

"Sebi has successfully modernised our capital markets and brought international best practice to this sector," Singh said.

"I commend Sebi for its work in the last 25 years. But I am sure its best is yet to come," he added.