With an aim to shielding investors from vested interests and potential corporate scams, market regulator the Securities and Exchange Board of India (Sebi) has proposed to frame a strict set of rules for research analysts and wants an independent oversight body for auditors. At the same time, the market watchdog is planning to prescribe a fresh set of guidelines for dealing with conflict of interest of associated persons in the market. It would also set up a separate unit for monitoring ‘Systemically Important Financial Institutions’ or very-large market entities.

The steps are being taken to comply with fresh guidelines issued by the International Organisation of Securities Commissions (IOSCO), a global body of market regulators.

The proposed steps were discussed at Sebi’s last board meeting, where approval was sought to take necessary regulatory actions in this regard.

Regarding the auditors, Sebi said that it would write to the government of India pointing out gaps in the regulations for auditors and suggest possible solutions.

The Sebi will request the government to consider a separate oversight authority for auditors, which is independent of audit profession.

The market regulator will put in place a proper mechanism “for enforcing compliance with auditing standards by the auditors of listed companies”.

Currently, the Institute of Chartered Accountants of India (ICAI) regulates accounting and auditing professions. ICAI is a licensing-cum-regulating body of the audit and accounting profession in India.

With regard to research analysts, Sebi said that there was a need for an “exclusive and comprehensive regulation” for regulating the research analysts in Indian markets.

Currently, there is no regulatory framework for entities providing analytical services in India except for disclosure of holding in a client company and they are not supposed to trade in the securities of the company whose report they are preparing, for 30 days from preparation of such report.

Source – PTI


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June 2021