Sebi chief Ajay Tyagi has pitched for providing for multiple products and fund raising avenues suitable for different profile of investors. Photo: Abhijit Bhatlekar/Mint
Colombo: Securities and Exchange Board of India (Sebi) chairman Ajay Tyagi has pitched for multiple products and fund raising avenues for investors so as to help broaden participation in the capital markets.
Besides, he said, developing currency-bond-derivatives links by creating suitable conditions and right enabling infrastructure could also attract investors to the markets. Tyagi was speaking at IOSCO-GEMC (International Organisation of Securities Commissions-Growth and Emerging Markets Committee) conference in Colombo on Wednesday.
Among other effective market expansion measures could be optimising market admission requirements to increase the number of local as well as foreign listings without compromising on corporate governance standards, he said. Tyagi has pitched for “providing for multiple products and fund raising avenues suitable for different profile of investors as well as for catering to the varied financing needs at various stages of economic activities”.
Improving market infrastructure would also help in attracting investors, he suggested. This includes improving electronic trading technology to encourage a greater volume of trading, with sufficient pre- and post-trade transparency; enhancing the accuracy as well as reliability of market and reference data; and a comprehensive risk management framework.
Tygai also focused on increasing the participation of, and incentivising, local institutional investors by having a re-look at legislative and regulatory restrictions and improving the network of professional and intermediaries which may facilitate in bringing more investors. In order to attract international investors, he suggested market liberalisation like relaxing and rationalising regulatory barriers to international investments.
Speaking on ‘liquidity in emerging markets’, Tyagi said this could be attributed, directly or indirectly, to global capital flows. “Topics like liquidity in emerging markets are evergreen given the episodic upheavals that emerging markets have witnessed over the last few decades, which can be attributed, directly or indirectly, to global capital flows,” he added.
Explaining market liquidity, he said it is the ability to facilitate large volume of trade without causing excessive price movements, while still reflecting a steady and fair market price. This concept of liquidity encompasses multiple dimensions: immediacy, depth and resilience.
Over the past 15 years, emerging market exchanges have grown dramatically in both size and activity. Market capitalisation has increased from about $3 trillion in 2004 to upward of $8 trillion in now.