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SEBI cautions small investors against ‘risky’ gains

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With a view to regulate commodity trading, Securities and Exchange Board of India (SEBI) today cautioned small investors against coming for quick gains through speculation in this market, which is ‘risky’ and requires a lot of technical expertise.

Sebi Chairman U K Sinha in an interview to a news agency told small investors not to fall prey to people saying small margins can bring in lot of money. He asserted that they are prepared to begin regulating commodities trading and all necessary safeguards would be put in place to keep the scamsters and manipulators at bay. Sinha added Sebi has over 15 years of experience of managing and regulating the derivatives trading.

Since 2000, derivatives in stocks have been present in India and Sebi has been regulating it and the stock exchanges have been providing this trading. The currency derivatives are also being regulated by Sebi.

Sebi, which expects merger with commodities market regulator FMC to be completed by next month, will put in place a new set of regulations to ensure safety of the small investors. Announced by Finance Minister Arun Jaitley in his Budget for 2015-16, FMC’s merger with Sebi will also help in facilitating participation of domestic and foreign institutional investors and launch of new products.

On corporates seeking to settle their capital market crimes, regulator Sebi has said anyone committing a serious offence must face the axe and any settlement plea would not be entertained, irrespective of the size and stature of the offender. Sinha said seriousness of the crime will be yardstick for action.

Sebi would follow the same system that is followed in the criminal law justice in the country. Sebi is also mandated to ensure good corporate governance at over 5,000 listed companies. Giving example of Sebi’s consent settlement guidelines, the Sebi chief said the regulator put in place a new set of rules in this regard in 2012 under which a serious offenders will have to pay the penalty and face the consequences.

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