Regulatory strategy for savings/investment schemes, that would address ponzi schemes

by Suyash Rai and Smriti Parsheera

The first task in dealing with ponzi schemes is correctly defining the scope of financial regulation. Once a firm is classified as a financial service provider, the appropriate regulator must choose a regulatory strategy for it. Assuming SEBI had clear jurisdiction with Sahara or MMM, what would SEBI . . . → Read More: Regulatory strategy for savings/investment schemes, that would address ponzi schemes

Unanticipated consequences of Finance Bill provisions on securitisation

by Bindu Ananth and Kshama Fernandes

Over 2006-12, RBI and SEBI have created a strong and conducive regulatory environment for securitisation, listing of securitised debt instruments, and standards of transparency and reporting. Securitisation volumes have picked up and we recently witnessed the first listed transaction.

In October 2011, the income tax authorities issued a . . . → Read More: Unanticipated consequences of Finance Bill provisions on securitisation

Hollowing out of the Indian financial system

Business as usual, in India, is taking us to a destination where RBI & SEBI & company will preside over a minor and inconsequential financial system. The bulk of India-linked finance will take place overseas, and the overseas market will dominate price formation for India-related financial products.

Why might this happen?

Finance is the . . . → Read More: Hollowing out of the Indian financial system

Insourcing vs. outsourcing government functions: A setback for public sector production of elementary education

A recurrent theme in the field of public administration is the appropriate separation, between things done within government qua government, versus the things that are best contracted out.

Example: A fascinating question in finance is the supervisory role of exchanges. Do we want exchanges to be rule makers and the front line of supervision, . . . → Read More: Insourcing vs. outsourcing government functions: A setback for public sector production of elementary education

Movement at SEBI towards principles-based regulation

A milestone for SEBI in its rule-making function

SEBI is a modern financial regulator in that it issues `subordinate legislation’ (i.e. regulations) which constitute law. These laws embed intricate domain knowledge where Parliament does not have the capacity for detail. This separation — where Parliament sets up SEBI and gives it the power to . . . → Read More: Movement at SEBI towards principles-based regulation

Taxing investors to pay NGOs

In India, NGOs are fashionable. It is almost never wrong, in the Indian discourse, to give more money and more functions to NGOs.

Many people have worried about the extent to which NGOs are being used to supplant failing State machinery. This may seem expedient, but no country every became a developed country on . . . → Read More: Taxing investors to pay NGOs

Is there a case for supervision of alternative investment funds? A new working paper

The task of financial regulation can be broken up into consumer protection (where we worry about small consumers being cheated by financial firms), prudential regulation (where we worry about the possibility of bankruptcy of one financial firm) and systemic risk regulation (where we worry about the procyclicality of financial regulation). Everything that we do . . . → Read More: Is there a case for supervision of alternative investment funds?

Paying for liquidity provision on exchanges

Market making versus the electronic limit order book Exchanges in India all operate as electronic limit order book markets. There are no `market makers’; there is just a publicly visible limit order book. Anyone is free to supply liquidity, by placing limit orders. The person who places market orders is the consumer of liquidity: . . . → Read More: Paying for liquidity provision on exchanges

Interesting readings

The Anna Hazare silliness is depressing. Writing in the Indian Express, Shekhar Gupta has an interesting angle on why there is so much interest in this snake oil.

India’s $2 trillion economy means we have to reform faster by R. Jagannathan on FirstPost.

Meera Subramanian has a beautiful story about how Diclofenac, fed . . . → Read More: Interesting Readings for August 23, 2011

Interesting readings

The frontiers of Nifty.

Next steps on the SEBI story: An interview with U. K. Sinha, by Puja Mehra and Rajiv Bhuva, in Business Today. Mobis Philipose in the Mint. Uproar over I-T raids on SEBI members, in Business Today. In probing SEBI board members, go by CVC rule: Abraham, by Sunny Verma, . . . → Read More: Interesting readings for July 7, 2011