VisualSoft
warning sends sensex down 77 points
Mumbai: The profit
warning from VisualSoft depressed the market sentiment and propelled selling in all new
economy stocks. This provoked profit booking in the frontline old economy stocks. The BSE
Sensex closed lower by 77 points while S&P CNX Nifty was down by 20 points.
The Sensex opened lower at 3,786 points
and closed at 3,713.97 points, against Wednesday's close of 3791.07 points, a loss of
77.10 points.
At the National Stock Exchange (NSE), the
S&P CNX Nifty followed suit to close at 1,187.55 as compared to the previous close of
1,207.10, a fall of 19.55 points.
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Sebi wakes up to insider
trading
Mumbai: The capital markets regulator,
Securities and Exchanges Board of India (Sebi) has finally woken up to the inadequacies of
the system to deal with insider trading.
Sebi has called a meeting of the Kumar
Mangalam Birla sub-group on March 31, to finalise a code of conduct for corporates, market
intermediaries and their employees, to check insider trading.
Very interestingly, the draft insider trading code, which was readied ready last October,
and reviewed by a meeting of the group in November, has been gathering dust since then as
a result of some reservations raised by Sebi board member Jayanth Varma.
Now that Sebis own credibility has
taken a beating, following its failure to effectively crack down on market manipulation or
insider trades, it is going into overdrive to put the regulatory framework in place.
The code, expected to be finalised on March 31, will put the onus of implementation on
corporates and market intermediaries. Monitoring the code is also to be done by the
concerned entity and failure to implement the code will invite regulatory action.
The draft code calls for every company to
create a compliance department, to be headed by a senior level employee who will function
as the compliance officer reporting to the managing director or the chief executive
officer.
The department will be responsible for
preservation of confidential information, pre-clearing of all employees and their
dependents trades, monitoring of trades and implementation of the code of conduct
under the board of directors supervision.
All transactions in securities by the
employees and directors are to be reported to the compliance department. Employees will
have to enter into a confidentiality agreement to protect confidential information for up
to six months after leaving a company.
Unpublished price-sensitive information will have to be handled on a
"need-to-know" basis. This will include, but not be limited to, financial
results, intended declaration of dividends, issue of securities, any major expansion plans
or execution of new projects, amalgamation, mergers and takeovers, disposal of the whole
or substantially the whole of the undertaking, etc.
Employees and directors will be subject to trading restrictions. There will be a
"trading window" for trading in securities of the company. Employees of a
company will not be able to trade in the companys scrip prior to the declaration of
any price-sensitive information. The period will be laid down by the company. The window
will be opened once the information has been disclosed to the public.
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Finally, BSE follows
international standards
Mumbai: The recent controversies
surrounding the Bombay Stock Exchange (BSE) has had a positive side-effect. In keeping
with the manner in which most stock exchanges around the world are constituted, the BSE
has finally got into a mode of separating the management and ownership of the exchange.
Several exchanges across the world --
including the Australia, Hong Kong and London Stock Exchanges and Nasdaq -- are entities
where ownership and trading rights have been segregated. Some of these, including the Hong
Kong and London bourses, are even traded on the same exchange.
It is now understood that necessary
paperwork has been initiated to convert BSE from an "association of persons"
status into a corporate entity by end-2001. This move has also gained momentum from the
statement made by the finance minister that management, ownership and trading rights
across all stock exchanges in the country are segregated from each other on the lines of
the National Stock Exchange.
A corporatised exchange is like any other corporate entity which is driven by profit
motive and ownership could be with any person or entity and not necessarily with a broker.
The corporatised exchange will have an independent board which will oversee the running of
the exchange by a management team. Brokers are given trading rights for the payment of a
certain fee.
The BSE, if it gets converted into a
corporate entity, is likely to attract a huge tax in the form of capital gains or stamp
duty on transfer of assets. The exchange has approached the finance ministry for a
one-time exemption from payment of capital gains on the transfer of revalued fixed assets
and from payment of stamp duty on transfer of properties to the corporate entity.
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UTI
chairman finds investment power pared down
Mumbai: The board of directors of the
countrys largest mutual fund, the Unit Trust of India, has decided to cut the
financial power of the chairman as well as the executive committee.
Based on the recommendations of the
Parliamentary Standing Committee, this decision also sees the setting up of an internal
committee to process all investment decisions before the chairman puts his stamp of
approval on them.
The board has decided to limit the UTI
chairmans powers to decide on primary market investments from Rs 50 to Rs 40 crore.
At present, the chairman clears investment
decisions up to Rs 50 crore while the executive committee decides on investments beyond Rs
50 crore.
The chairman and the executive committee
exercise their powers following certain laid down parameters. From now on, an internal
committee consisting of senior executives will help the chairman to take investment
decisions.
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