RealTime IT News

India to Prepare Internet Trading Norms

The Securities and Exchange Board of India (SEBI) proposes to set up a regulatory framework for Internet trading by the end of December.

SEBI has set up a committee to recommend measures and guidelines for the introduction of trading in the secondary capital markets on the Internet. The committee, headed by BP Pathak, is expected to submit its report by mid-December.

The SEBI board, which will meet during the last week of December, is expected to take up the committee's recommendations for consideration.

Once the framework is in place, trading via the Internet is expected to be introduced in early next week. However, until the cyber-laws are enacted by the Indian government -- a measure expected to be embraced shortly -- Internet trading will be 'order-based'.

According to SEBI chairman DR Mehta, though investors will be able to access the stocks exchange's mainframe, all trades will have to be routed through the brokers, as electronic signatures are not currently recognized. The chairman was also hopeful that signature digitalization, which will be legally possible once the cyber-laws are enacted by the Parliament, will become a reality soon.

"We hope to receive the BG Pathak panel report on Internet trading soon and a decision in this regard will be taken before Christmas," said Mehta.

Internet trading will cut transaction costs in a market which already boasts the the second lowest such fees in the world, as well as quicken trade and facilitate better price discovery. The Internet facility is expected to provide more reliable trading data to the client, Mehta added.

He said that trading on the Net will not eliminate the broker, as buy and sell order would still have to be placed with the stock exchange through brokers.

The Emerging Markets Committee (EMC) of the International Organization of Securities Commissions (IOSCO) is also studying the possibility of stock trading on the Net. IOSCO has set up a task force to prepare a detailed study.