SEBI to issue guidelines to check ‘conflict of interest’ cases
07 Nov 2011
The Securities and Exchange Board of India (SEBI) plans to issue a new set of guidelines with the objective of reducing the cases of conflict of interest in the stock market.
The new guidelines, drafted by SEBI under the guidance of the International Organization of Securities Commissions (IOSCO), are expected to help limit dubious activities in the market and help maximise profits.
The guidelines would be introduced in the Indian market as Guidelines for Dealing with Conflicts of Interest in Securities Market.
All investors in the Indian stock market are expected to follow the rules as set out by SEBI.
SEBI has for long been trying to fight `conflict of interest', and in September it called for recommendations from the public for dealing with the issue.
SEBI has been informed that under the Guidelines for Dealing with Conflicts of Interest in Securities Market, the self regulatory organization (SRO) would play the role of investment advisory for provision of information to investors.
According to a finance ministry spokesperson, the norms would stipulate that no person could carry on the activity of offering investment advice unless he was registered as an investment adviser under the regulations.
The `conflict of interest' has emerged as a major concern among global investors and it is being hoped that with SEBI's initiative, the turmoil caused by the `conflict of interest' would be limited.
It has now become a norm for entrepreneurs to take recourse to illegal tactics to promote their business, which has led to worries among the international investors.
According to SEBI, the absence of proper guidelines for addressing the `conflict of interest' menace had encouraged entrepreneurs in the past to indulge in to illegal activities.
