With the number of new investor accounts falling by nearly half in the last fiscal and the trade volumes nearing a plateau, regulator Sebi is mulling various steps to deepen the Indian stock market this year. The measures are being undertaken to launch new products in the derivatives segment, already the mainstay of the market in terms of volumes, and introduce no-frills trading accounts to attract new investors to cash market as well.
In the Indian capital market, derivative contracts are available with underlying assets like individual stocks, stock indices, currencies, and interest rates, among others. However, trade volumes have been relatively sluggish in most of the non-stock derivatives and the steps would be taken this year to boost these segments, a senior official said.
For the cash market, Sebi expects the newly proposed tax-saving equity scheme (Rajiv Gandhi Equity Scheme) to provide a boost and could soon introduce a no-frills trading account for the benefit of new investors interested only in basic trading activities.
Among other steps, Sebi would look at employing latest technology and developing a team of officers with key skills in derivatives during the current fiscal. The proposed initiatives for 2012-13 include introduction of different derivative products suitable for Indian markets, as well as work towards broadening the participation in securities markets.
With a view to introduce new products, especially in derivatives segment, Sebi is also reviewing the current risk management framework for exchanges, including increasing efficiency of settlement process and margining system.
Sebi would also put in place the risk management and risk containment measures for derivatives on volatility, and introduce new derivatives for hedging interest rate risk.
Besides, it plans to introduce the concept of clearing members in the cash segment as well.
In another development, investors may be allowed to invest in shares of state-run companies, besides BSE-100 shares under the proposed Rajiv Gandhi Equity Scheme, reports Hindu Business Line. Investments are also likely to face a reduced lock-in period. The lock-in period is likely to be reduced from the present three years to one year, with some conditions. The new norms are part of the new guidelines for the scheme, expected to be notified by the Finance Ministry within a month, the paper quoted sources as saying.