New Delhi: First globally, Securities and Exchange Board of India (SEBI) is planning to issue regular ‘risk factor Disclosures‘ Feather Market Trends including the rise and fall to help investors Take the right decision by learning from the insights of the regulator, sources said. The move, which is still in the early stages of discussion, could help investors avoid a herd mentality that has been seen especially during the past few years – starting with the massive sell-off when the pandemic hit 2020 Hit the world in the beginning, soon followed by a sharp boom in buying stocks without understanding the fundamentals and largely due to the quick-get-rich-quick stories and subsequent losses.
Of particular importance is the loss suffered by investors in the large number of IPOs in recent times and in the highly complex futures and options segment of the capital market.
“Although investors see a certain pattern every single cycle – that is, everyone rushes to buy stocks when they are good and then panic sell when a crisis strikes. The basics of capital market investing are always out the window. are thrown out and one of the major reasons for this is the lack of really independent insight,” said a top official.
The official further said that most of the research material available in the market has been prepared by the market participants, keeping in mind their own business interests and hence it may be a good idea if the regulators themselves to make their insights from the up or down trend public. does. Market.
Explaining the idea SEBI is working on, a high-level source said, “Time has come for SEBI to set an example by making disclosures on matters that could have implications for investors at large. and may disclose important market-wide data points.”
“A simple sentence mandated under the current regulations that some ‘investments are subject to market risks’ has become too cliche and is the kind of statement of motherhood that no longer works. What is required at this point in time is that investors should do something Get detailed datasets, that too from the regulator and not just their wealth managers, whose main objective is to maximize their businesses,” said the source involved in the proposed move.
“We are not a nanny state where a regulator has to do and what not to do to market participants, including investors, but it is certainly the responsibility of the regulator to make all necessary disclosures and tell market participants how those disclosures are to be made. needed.
“But when we ask others to make all the necessary disclosures, it becomes the duty of the regulator to let investors and all market players know what has been the learnings and understandings,” the source said.
SEBI has a vast amount of facts and figures and huge datasets, thanks to the use of big data, artificial intelligence and other aspects of latest technologies, which can be of great help to all the investors and other market participants if SEBI starts creating itself. Makes regular disclosures about its learning.
“It is said that if we analyze the past and present well then it can be really easy to understand the future. SEBI has built great capabilities over the years where it is in a position to analyze things that This can be good or bad for investors and if information is passed on to investors in the form of risk-factor disclosures, investors can make excessive leverage for their investment decisions, a senior government official said.
Right now, regulations require that all listed companies, as well as certain market participants and market infrastructure institutions, disclose their decisions, policies and future strategies to help investors make the right investment decisions.
However, there is no such requirement for the regulator and it is high time that SEBI itself leads by example as it is the only entity that has got a complete holistic view of the entire market, the official said.
“It goes beyond saying that the regulator is in the best position when it comes to datasets and disclosures that can be relied upon the most and are market-wide in nature. At a later stage, SEBI will allow brokers, exchanges and other entities To create market-wide exposure to investors factor Disclosures that can be relied upon by investors,” said a source, adding that discussions are on.
The source further added that the idea is to make fact-based disclosures on a regular basis – which could be annually, half-yearly or quarterly.
“While the finer details are still being worked out, these disclosures may also focus on investor behavior over a period of time, whether they are making gains or losses, market segments that are profitable or loss-making. running, areas of interest etc.
“We have the advantage of big data to help us understand what has worked for the market and what has gone awry. There is no point in keeping things completely invisible to investors. Obviously, some things are public. But investors have a right to know whether there has been a regulatory understanding of a good or bad market, a scam or dealing with scammers,” the source said.
The Indian stock market has seen huge volatility in recent months, mainly due to sudden outflow of foreign funds and delayed economic recovery in most key sectors, though the last two financial years have seen a relatively strong trend despite the COVID-19 pandemic. .
Total resource mobilization from capital markets remained strong at over Rs 10 lakh crore during 2020-21, surpassing the previous year’s figure of Rs 9.96 lakh crore, though businesses in general were affected due to the pandemic.
A unique feature has been the unprecedented increase in the participation of individual investors in the securities market, including mutual funds.
The corporate governance norms and disclosure requirements for listed companies have been further strengthened in the last two years, including increasing the role and applicability of the Risk Management Committee, expanding the requirements to compulsorily formulate dividend distribution policy and many more. Huh.
Of particular importance is the loss suffered by investors in the large number of IPOs in recent times and in the highly complex futures and options segment of the capital market.
“Although investors see a certain pattern every single cycle – that is, everyone rushes to buy stocks when they are good and then panic sell when a crisis strikes. The basics of capital market investing are always out the window. are thrown out and one of the major reasons for this is the lack of really independent insight,” said a top official.
The official further said that most of the research material available in the market has been prepared by the market participants, keeping in mind their own business interests and hence it may be a good idea if the regulators themselves to make their insights from the up or down trend public. does. Market.
Explaining the idea SEBI is working on, a high-level source said, “Time has come for SEBI to set an example by making disclosures on matters that could have implications for investors at large. and may disclose important market-wide data points.”
“A simple sentence mandated under the current regulations that some ‘investments are subject to market risks’ has become too cliche and is the kind of statement of motherhood that no longer works. What is required at this point in time is that investors should do something Get detailed datasets, that too from the regulator and not just their wealth managers, whose main objective is to maximize their businesses,” said the source involved in the proposed move.
“We are not a nanny state where a regulator has to do and what not to do to market participants, including investors, but it is certainly the responsibility of the regulator to make all necessary disclosures and tell market participants how those disclosures are to be made. needed.
“But when we ask others to make all the necessary disclosures, it becomes the duty of the regulator to let investors and all market players know what has been the learnings and understandings,” the source said.
SEBI has a vast amount of facts and figures and huge datasets, thanks to the use of big data, artificial intelligence and other aspects of latest technologies, which can be of great help to all the investors and other market participants if SEBI starts creating itself. Makes regular disclosures about its learning.
“It is said that if we analyze the past and present well then it can be really easy to understand the future. SEBI has built great capabilities over the years where it is in a position to analyze things that This can be good or bad for investors and if information is passed on to investors in the form of risk-factor disclosures, investors can make excessive leverage for their investment decisions, a senior government official said.
Right now, regulations require that all listed companies, as well as certain market participants and market infrastructure institutions, disclose their decisions, policies and future strategies to help investors make the right investment decisions.
However, there is no such requirement for the regulator and it is high time that SEBI itself leads by example as it is the only entity that has got a complete holistic view of the entire market, the official said.
“It goes beyond saying that the regulator is in the best position when it comes to datasets and disclosures that can be relied upon the most and are market-wide in nature. At a later stage, SEBI will allow brokers, exchanges and other entities To create market-wide exposure to investors factor Disclosures that can be relied upon by investors,” said a source, adding that discussions are on.
The source further added that the idea is to make fact-based disclosures on a regular basis – which could be annually, half-yearly or quarterly.
“While the finer details are still being worked out, these disclosures may also focus on investor behavior over a period of time, whether they are making gains or losses, market segments that are profitable or loss-making. running, areas of interest etc.
“We have the advantage of big data to help us understand what has worked for the market and what has gone awry. There is no point in keeping things completely invisible to investors. Obviously, some things are public. But investors have a right to know whether there has been a regulatory understanding of a good or bad market, a scam or dealing with scammers,” the source said.
The Indian stock market has seen huge volatility in recent months, mainly due to sudden outflow of foreign funds and delayed economic recovery in most key sectors, though the last two financial years have seen a relatively strong trend despite the COVID-19 pandemic. .
Total resource mobilization from capital markets remained strong at over Rs 10 lakh crore during 2020-21, surpassing the previous year’s figure of Rs 9.96 lakh crore, though businesses in general were affected due to the pandemic.
A unique feature has been the unprecedented increase in the participation of individual investors in the securities market, including mutual funds.
The corporate governance norms and disclosure requirements for listed companies have been further strengthened in the last two years, including increasing the role and applicability of the Risk Management Committee, expanding the requirements to compulsorily formulate dividend distribution policy and many more. Huh.