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November 24, 1999
SEBI to approve Net trading rules in January
Full-fledged Internet trading, including online payment, is not feasible unless cyber laws are enacted, said Securities and Exchange Board of India Chairman D R Mehta.
However, SEBI is likely to put in place regulations concerning the safety and security of Internet trading before December 1999, he added.
Before the cyber laws are passed in Parliament, Web trading will be limited to placing orders with brokers because electronic signatures would not be recognised.
The B P Pathak Committee on Internet Trading is most likely to submit its report soon and the SEBI board will try to approve it before Christmas, Mehta said.
Mehta was talking to reporters in New Delhi during the wrap-up session of the Emerging Markets Committee Meeting of the International Organisation of Securities Commissions.
The four working groups of the Pathak Committee are studying the legal, technical and safety standards of Internet trading.
It is said to cut transaction costs, already the second lowest in the world, quicken the trade and facilitate better price discovery.
Asked on the volumes expected via new media, Mehta said none could stop Internet trading, ''so there will be volumes.''
SEBI is also likely to approve recommendations of the Kumar Mangalam Birla Committee on Corporate Governance at its next board meeting in December.
Mehta said all companies willing to list on the stock exchange will mandatorily have to adopt corporate governance principles as laid down by the Birla Committee.
''Even if 200 companies covering 90 per cent of stock trading are covered, it will be a major achievement.''
Meanwhile, IOSCO has mandated a working committee on Internet trading to study the impact of the Internet on securities markets.
Its report will be taken up by the IOSCO Technical Committee in Washington next month, Paul K Melly, chairman of the IOSCO Executive Committee, said.
''Regulatory principles governing traditional trading apply very well to Web trading. It is a question of technologies and international cooperation to ensure regulatory compliance from customers and companies,'' he added.
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