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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 Sebi’s 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 dependent’s 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 company’s 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 country’s 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 chairman’s 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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domain - B : Indian business : News Review : 23 Mar 2001 : capital market