Trade deals remove uncertainties, will accelerate capital formation, says SEBI chairman Pandey

SEBI Chairman Tuhin Kanta Pandey on Wednesday said that end of trade frictions through trade deals like the one with the US removes uncertainties, which will help accelerate capital formation.Replying to a question on whether the trade deal with the US will push foreign investors to get more money into the country, Pandey said such moves can “spur” investment decisions.

“Fundamentally, when you have an overhang of a regulatory action which is removed, and trade frictions removed, so any capital formation is always accelerated,” Pandey told reporters here.

The removal of the uncertainties can spur investment decisions and get a greater predictability on capital, he added. “So overall in the situation I could say that with the deals that have been done on the trade side, a lot of uncertainties have been removed,” he said.Speaking on the sidelines of a conference organised by capital markets regulator SEBI to deepen the corporate bond market, Pandey declined to comment when asked about the Government’s proposal to increase the securities transaction tax on derivative trades. “At this point of time, we are not contemplating any measures and whatever framework that we have put in place, that will continue,” he said. To a specific query on weekly expiry and whether SEBI is mulling banning them, he reiterated that the regulator will continue with the status quo on the matter.Meanwhile, speaking on the need to deepen bond markets, Pandey rued that more investors are aware of crypto currency than the bond markets, as per a SEBI survey.

The bond markets have seen a welcome growth over the last decade, but more needs to be done to deepen the market, including ensuring that a wider set of issuers beyond the top-rated companies use the avenue, having more public issuances and companies beyond financial services sector using the route.The capital markets watchdog has adopted an approach of “optimum regulation” for bond markets, but he urged all the stakeholders to come together for achieving the desired goals on the corporate bond market.BSE’s managing director and chief executive Sundararaman Ramamurthy floated an idea to mandate accessing corporate bond market with public issues for fund-raising above a certain threshold and also giving tax exemptions to push issuers.