Regional Conference on Investor Protection in Capital Markets. Conference Proceedings Report

Transcription

1 Regional Conference on Investor Protection in Capital Markets Mumbai, India October, 2013 Conference Proceedings Report Conference Organizers Implemented by

2 Published by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH Taiyuan Office Building Bldg. 1, 15th Floor P.O. Box No.14, Liangmahe Nanlu, Chaoyang District Beijing, P.R.China Responsible: Thorsten Giehler Program Director Financial Sector Reform Programme Commissioned by German Federal Ministry for Economic Cooperation and Development (BMZ) Editors: FTKMC and GIZ This report has been prepared for general information, and the views summarized herein do not necessarily reflect those of BMZ, GIZ and further organizing parties. No representation or warranty is made as to the accuracy or completeness of information contained. Beijing, December

3 TABLE OF CONTENTS Conference Agenda 3 Brief Summary Report of the Conference 8 Day One Summary of speeches, presentations and panel 11 Day Two Summary of speeches, presentations and panel 35 Closing Session 47 Speaker Bios 50 2

4 AGENDA Sunday 27 th October 19:00 Welcome Dinner for Speakers and Panellists (Welcome Remarks from German Consul General Mr. Michael Siebert) Location: Residence of the Consul General Monday 28 th October 08:00 09:00 Registration and coffee 09:00 09:20 Inaugural Address: 09:20 09:40 Key Note Speech: Mr. U.K. Sinha, Chairman, Securities and Exchange Board of India (SEBI) Mr. Karl-Burkhard Caspari, Chief Executive Director Securities Supervision, German Federal Financial Supervisory Authority (BaFin) 09: Mr. Stefan Helming, Country Director India, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) Introduction: Mr. Thorsten Giehler, Project Director Emerging Markets Dialogue Asia, GIZ 10:00 10:30 Tea Break Master of Ceremony: Mr. Pallab Bose Moderator Session 2: Ms. Menaka Doshi (Corporate Editor, CNBC TV18) 10:30 11:00 New Trends in Capital Market Regulation Challenges of national and cross-border investor protection in Europe and Asia Speaker 1: Mr. Tajinder Singh Deputy Secretary General, International Organization of Securities Commissions (IOSCO) Speaker 2: Ms. Nicoletta Giusto (International Relations Officer Director CONSOB) 3

5 11:00 11:30 Panel Discussion: Mr. Amarjeet Singh (Chief General Manager SEBI), Mr. Karl- Burkhard Caspari (Chief Executive Director BaFin), Mr. Tajinder Singh (IOSCO), Ms. Nicoletta Giusto (CONSOB) 11:30 11:45 Q & A Session 3 11:45 12:30 Investor Education Financial literacy- Assessment methods and evaluation, customer empowerment Country perspective best practice 12:30 12:45 Q & A 12:45 14:00 Lunch Break Speaker 1: Mr. Ashish Kumar Chauhan (MD and CEO Bombay Stock Exchange BSE) and Mr. Ambarish Dutta (CEO BSE Institute Limited) Case Study GIZ India & Bombay Stock Exchange. Speaker 2: Dr. Kusumaningtuti S. Soetiono, Commissioner in charge of Financial Education and Consumer Protection, Indonesia Financial Services Authority (OJK) Moderator Session 4: Mr. Ranjeet S Mudholkar (Vice Chairman and CEO Financial Planning Standards Board India) 14:00 14:45 Disclosure and Transparency and other Regulatory Measures to Prevent Misselling of Financial Products How to improve the regime for information disclosure and transparency Reducing mis -selling of financial products Speaker 1: Mr. Moritz Beker, Senior Policy Officer, Section INT 4 International Policy/Affairs Securities Supervision (BaFin) Speaker 2: Mr. Stephen Po, Senior Director, Intermediaries Supervision Department, Securities and Futures Commission (SFC) Hong Kong 14:45 15:15 Panel Discussion: Mr. Moritz Beker (BaFin), Mr. Ranjeet S Mudholkar (Financial Planning Standards Board India), Mr. Stephen Po (SFC Hong Kong), Mr. Yasuto Watanabe (Director International Financial Markets Financial Services Agency Japan), Ms. Nicoletta Giusto (CONSOB) 4

6 15:15 15:30 Q & A 15:30 16:00 Tea break Moderator Session 5: Robert Elsen (Financial Counsellor German Embassy Beijing) 16:00 16:30 Dispute Resolution Regime & Mediation and Arbitration Dispute resolution: Examples from Asia and Germany Complaint management: Customer Care and Ombudsman Speaker 1: Prof. Dr. Günter Hirsch, former president of the Federal Supreme Court of Germany and Mr. Robert Elsen: Financial Services, the Ombudsman in Germany Speaker 2: Ms. Zia Mody, Founder and Senior Partner of AZB & Partners 16:30 17:00 Panel Discussion: Prof. Dr. Günter Hirsch, Mr. Robert Elsen, Ms. Zia Mody, Mr. P.K. Bindlish (Chief General Manager, SEBI), Ms. Wang Liyuan (GIZ) 17:00 17:15 Q & A 17:15 17:30 Day 1 Wrap Up: Mr. Wolfgang Buecker, Head of Financial Systems Development GIZ Germany) 19:00 Dinner 5

7 Tuesday 29 th October Moderator Session 6: Mr. Thorsten Giehler (Project Director Emerging Markets Dialogue Asia GIZ) 09:00 09:45 Investor Compensation Funds Experiences in the formation and development of Investor Compensation Funds Challenges of Cross Border Compensation Speaker 1: Mr. Thorsten Giehler on behalf of Mr. Dirk Cupei, Managing Director, Financial Market Stability, Deposit Protection - German Banking Association and Vice Chairman European Forum of Deposit Insurers (EFDI): Investor Compensation in Europe- Current trends in EU legislation.) Speaker 2: Mr. R.Sundararaman (Chief Business Excellence and new products at National Stock Exchange of India NSE) 09:45 10:15 Panel: Mr. R.Sundararaman (NSE), Mr. Hoang Hai (Vice General Director of Issuing Department of Securities State Commission Vietnam), Mr. Somasekhar Sundaresan (Partner. J.Sager Associates) 10:15 10:30 Q & A 10:30 11:00 Tea Break Moderator Session 7: Mr. Michael Zollweg Head of Trading Surveillance Deutsche Börse AG 11:00 11:30 Stock Exchange Surveillance Role of the Trading Surveillance for Capital market regulation Trends and challenges from Asia and Germany (Europe) Cross border Information Sharing Market Manipulation Speaker 1: Mr. Michael Zollweg (Head of Trading Surveillance Deutsche Börse AG) and Mr. Carl-Frederik Scharffenorth (Senior Trading Surveillance Analyst - Deutsche Börse AG) Speaker 2: Mr. Akiyoshi Maruyama Director of Market Oversight Intelligence, Market Surveillance Division Securities and Exchange Surveillance Commission- Financial Services Agency Japan 6

8 11:30 12:00 Panel: Mr. Michael Zollweg (Deutsche Börse AG), Mr. Akiyoshi Maruyama (Financial Services Agency Japan), Dr. V.R Narasimhan (Chief Regulations National Stock Exchange of India Ltd ) Mr. Carl-Frederik Scharffenorth (Deutsche Börse AG) 12:00 12:15 Q & A 12:15 12:45 Closing Session: Mr. Karl-Burkhard Caspari (Chief Executive Director and BaFin), Mr. R K Padmanabhan (Executive Director SEBI), Mr. Thorsten Giehler (Project Director Emerging Markets Dialogue Asia GIZ) 12:45 Lunch 7

9 BRIEF SUMMARY REPORT OF THE CONFERENCE The Emerging Markets Dialogue brought together emerging market stakeholders such as supervisory authorities, stock exchanges, corporations, and international organizations to jointly develop concrete solutions in the financial sector. This dialogue on investor protection in capital markets strived to complement existing processes, such as the G20 meetings on a working level. In this context, on 28th and 29th of October 2013 the Securities and Exchange Board of India (SEBI), the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) on behalf the German Federal Ministry of Development and Cooperation (BMZ) jointly conducted a high level regional conference on investor protection in capital markets. The main focus was on best practices and core issues relating to investor protection from the Asian as well as the European perspective. The goal was to provide an opportunity for regulators, policymakers, international standard setting bodies, market participants, stock exchanges as well as other stakeholders to share their knowledge and experience and to discuss measures to improve the investor protection regime. Participants came from across Asia, including India, China, Indonesia, Vietnam, Japan, Hong Kong, Mongolia, Sri Lanka, and Maldives as well as from Germany, Italy, and Spain (IOSCO) The Conference on day one addressed issues of new trends in capital market regulation, investor education, disclosure and transparency and other regulatory measures to prevent mis-selling of financial products as well as dispute resolution regime and mediation and arbitration. Day two of the conference focused on Investor compensation funds as well as stock exchange surveillance. Five important principles highlighted by Mr. U. K. Sinha, Chairman, SEBI, include: Equitable and fair treatment of investors Disclosure and transparency Financial education and awareness Protection against fraud Mechanism of redressal Some of the emerging risks as identified by IOSCO include Risks associated with low interest rate environment and search for high yield Risk associated with collateral management OTC derivative space Reversal of capital flows to the emerging markets Mr. Karl-Burkhard Caspari highlighted that there are different approaches and experiences some of which are based on national peculiarities but others also on innovation that can serve as a model for other markets. He illustrated this thought with a picture: all of us use electricity for the economy and our day-to-day lives. However, from country to country and from region to region there are different voltages and strengths, and even different sockets. This situation is similar to that of investor protection. We are in agreement on principle. That said, different approaches are taken to achieve the same objective. Our objective should be to design an adaptor enabling every country to make adjusted use of the universal principles of investor protection. Mr. Caspari 8

10 Concluded by Stating that the keynote speech and conference fulfilled the task of informing each other and learning from each other. He was happy to record that this is the most valid outcome of the meetings. Some of the Key Outcomes from the Conference were: Regulators are faced with the complexity of products and financial innovation and aspects of product intervention, which may lead to the (potential) change of the regulator s point of view from focusing on the point of sale to product governance. Studies have shown that Product brochures are not read by many and hence a Key Information Document (KID) is important. Investors spend approx11% of their time on the selection of financial products as opposed to 80% on Commercial goods e.g. mobile phones Cross border protection as well as cross border surveillance work well within Europe but should and need be extended beyond Europe. The conference was a unique opportunity for regulators, policymakers, international standard setting bodies, and market participants to share knowledge and experience and to discuss measures to improve investor protection. The feedback is overwhelmingly positive, 80 percent confirmed that expectations were met and more than half of the participants assured that the conference was of direct relevance to their work. The Emerging Markets Dialogue will continue in 2014, in order to enhance the dialogue among advanced economies and emerging markets to highly relevant G20 financial sector issues. CONFERENCE REGISTRATION AND INAUGURATION 9

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12 CONFERENCE PROCEEDINGS Day 1 Session 1: Inaugural Address Mr. U K Sinha Chairman, Securities and Exchange Board of India (SEBI) The inaugural speech at the conference was delivered by SEBI Chairman, Mr. U K Sinha. He warmly welcomed delegates from different parts of the world, representatives of various financial institutions in India and other invited guests. He particularly acknowledged the contribution of GIZ and BaFin, who helped in conceptualizing and organizing the conference. He remarked that this conference is, perhaps, one of the first of its kind, where many countries have come together at the regional level. He also thanked International Organization of Securities commissions (IOSCO) for their continuous support. He stated that SEBI has been created with a primary objective of protecting the investors. Though, different regulators follow different standards and practices for investors' protection based on their historical, financial and cultural experiences, this conference serves as a very useful platform for all to share experience with each other. Mr. Sinha briefly highlighted the key principles of investor protection in financial markets enunciated by G20 and Financial Stability Board (FSB) and what SEBI has been doing in each area: Equitable and fair treatment of consumers He stated that SEBI has provided that Mutual funds/amcs shall launch schemes under a single plan and ensure that new investors are subject to single expense structure. Earlier, the load and charges were different for different class of investors. SEBI has requirements that if somebody is acquiring beyond a certain percentage, than mandatorily he has to make a open offer to the minority shareholders. In matters of Mergers & Acquisitions, SEBI now has to satisfy itself that the interest of the minority shareholders has been protected. SEBI has directed that the proposals for M&A have to be voted by majority of the minority shareholders. SEBI has also provided mechanism of electronic voting and postal voting. Disclosure and Transparency - SEBI has prescribed the announcement of daily NAV of Mutual Fund schemes (some countries follow the fixed NAV mechanism) by Mutual Funds/AMCs. Further, SEBI has started a new 11

13 practice called product labeling. Under this practice, all mutual fund products are marked with three different color labels, so that the risk involved with the product can be known by the retail investors, even if they do not understand the market/risk. In order to segregate distribution and advice SEBI has come out with a new regulation called Investor Advisers Regulations. SEBI has rationalized disclosure requirements for IPOs by advising that important segments are represented in one particular area of the prospectus. This enables the prospective investor to know risk and other relevant factors associated with a particular company raising funds. Listed companies have to give reports every quarter about what has transpired in their company including event based disclosures. Further, pledging and any kind of encumbrance by the promoters on their shares has to be informed to the exchanges. Protection against fraud SEBI has requirements about the role of merchant bankers and how they will be held responsible for furnishing any bad or incomplete information as disclosure. Mr. Sinha emphasized the role and importance of enforcement in regulating the securities market. He remarked that the trust of the market can be generated only when the enforcement is swift and fast. Mr. Sinha highlighted the important area of regulation of Collective Investment Schemes (CIS) where SEBI would be happy to receive thoughts and suggestions from the participants on the basis of their experiences. Financial Education and Awareness Mr. Sinha intimated about the mass media campaigns initiated by SEBI to create investor awareness. He highlighted that SEBI has insisted every AMC to spend 2 basis points of the fee income (which happens to be a substantial amount considering the size of MF industry in India) towards investor education. In response, the Mutual Fund industry has assured that each mutual fund will be adopting certain number of districts to launch very intensive campaigns and contact program so that new investors can be introduced to securities markets. Chairman, Sinha informed that SEBI conducts many investor education programs through its resource persons, regional seminars, etc. SEBI has started a dialogue with the central board of secondary education to include concepts of financial planning in the school curriculum. He stated that SEBI has started a computerized grievance redressal mechanism called SCORES. Investors are no longer required to write letters or use fax machines to lodge complaints. Investors can lodge the complaints online by using SCORES. An automatic acknowledgement is given to the complainant and the status of the complaint can be checked online at every stage. SEBI has also started a 24*7 telephonic helpline in 14 languages. Mr. Sinha also briefly explained about the reforms measures in the arbitration and grievances redressal mechanism area. Mr. Sinha informed about the ordinance and the bill which has been placed before the Parliament, to further empower SEBI in various areas. The ordinance clearly defines the conditions under which SEBI shall have jurisdiction over CIS. This ordinance gives powers and direct authority to SEBI to recover the money for the orders passed by it. The ordinance also gives search and seizure powers to SEBI in case of serious investigation matters. Mr. U K Sinha concluded his speech by again acknowledging the German friends for their valuable contribution in organizing this event. He hoped that the participants would have fruitful discussions. Finally he called on participants to tell, in any of the sessions, what has been their experience in regards to the various issues raised by him, and whether there is anything more required to be done. He said he would look forward to receiving recommendations emerging out of deliberations of the conference. 12

14 Session 1: Keynote Speech Mr. Karl-Burkhard Caspari Chief Executive Director Securities Supervision, German Federal Financial Supervisory Authority (BaFin) Mr. Karl-Burkhard Caspari gave the first keynote address. He said Mumbai was chosen as the venue for this Investor Protection conference as it is an important financial market in Asia and houses leading stock exchanges. The importance of Investor Protection becomes evident when markets fail to fulfill their role of allocating capital within the economy once investors lose trust in the efficiency and integrity of the capital markets. The objective of the conference is to shed greater light on investor protection and exchange experiences to learn from each other. Since different approaches exist to achieve the same objective, every country needs to make adjustments in universal principles of investor protection. Since the financial crisis, the focus of international bodies has been on investor protection. International organizations like OECD and IOSCO have drafted principles and regulatory requirements to increase investor protection. Issues of Investor Protection have been high on the agenda of global and international forums. At the Cannes Summit in 2011, the G20 heads of state adopted the high level principles of Financial Consumer Protection. In July 2013, recommendations for three of the ten high level principles were forwarded: Disclosure and Transparency, Responsible Business Conduct, and Complaints Handling and Redress. An important link in investor protection is the intermediary and the issuers of financial products. In this context, Revision of MiFID the European Directive on Investment Services and Markets in Financial instruments is the key activity in Europe and EU. The main aim of this is Investor Protection. It is expected to impose stringent requirements on portfolio management, investor advice and the offering of complex financial products. It also proposes for granting of product intervention right to limit or prohibit products and financial practices that pose a risk to investor protection. As a result, MiFID is expected to take a big step towards productspecific regulation. One aspect of such type of regulation is the Key Information Document (KID). It has already been implemented in invest funds like UCITS (Undertakings for Collective Investment in Transferable Securities). There are other products in which this principle is planned for applying through the Packaged Retail Investment Products (PRIPS) initiative. 13

15 IOSCO has established a new committee to focus primarily on investor education and financial literacy. Another key issue under discussion is product governance to improve accountability of not only financial service providers but also of product manufacturers. Mr. Stefan Helming Country Director India, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) Mr. Stefan Helming formally opened the Regional Conference on Investor Protection in Capital Markets. He attributed heritage as the reason for the selection of the conference venue the positive heritage of Indian strengths and the heritage of Indian-European history. A member of G20 and BRICS, India, which has an advanced capital market, is important in the financial sector. He expressed GIZ s happiness to be the implementation partner of the conference on behalf of the German Federal Ministry of Development and Cooperation BMZ The growth of emerging markets is a mark of shift in international economic and political relations. In historic perspective, BRICS and other emerging countries are regaining their position that they occupied before the industrial revolution of the West. In the short run, the shift is surprising and gives rise to new alliances with a significant influence on global processes. In this context, this Emerging Market Dialogues between representatives of emerging market and advanced economy, which includes business representatives and policy makers, to develop feasible solutions for the most pressing challenges in the financial sector is welcome. The conference attempts to enhance capacity of financial institutions and governmental agencies through peerlearning and knowledge exchange, while doing so attempts to complement existing work streams like BRICS and the G20 meetings. Germany supports this conference as communication between emerging and advanced countries is essential to build trust in financial markets and enhance international investor protection. It wants to contribute to the establishment of a consistent global regulatory framework on investor protection. Participation in the conference by Mr. Sinha, Chairman of SEBI and Mr. Caspari, Chief Executive Director of BaFin allows for the exchange of views at the highest level. This regional conference will not be a one-off event as it will kick-start a fruitful collaboration on capital markets regulation between German and Indian authorities. GIZ would support and hand-hold any further steps that may emerge in bilateral meetings during the conference. The outcome is important even to advanced countries, especially with respect to the G20 working groups. 14

16 Mr. Helming expressed his satisfaction with the long standing cooperation between Germany and China in investor protection in capital markets. He welcomed the delegates and speakers at the conference from other Asian countries such as Japan, Indonesia, Mongolia, and Vietnam. He invited all participants to join in the discussion to work on common solutions and build future cooperation in Investor Protection. He concluded by saying that he is confident that the conference will provide with an excellent opportunity for knowledge exchange and peer learning to benefit all participants. Session 1: Introduction to the Conference Mr. Thorsten Giehler Project Director, Emerging Markets Dialogue Asia, GIZ Mr. Thorsten Giehler in his introduction speech stated that at GIZ they underscore the need and prospect of working together. GIZ is operates in over 100 countries. He gave a quick sequence and objectives of the conference highlighting the six major topics of investor protection that were selected by the organizers as: Regulatory Perspectives Education and Financial Literacy Transparency and Disclosure Dispute Resolution and Mediation Compensation Stock Exchange Surveillance Why these topics? To elaborate, investor protection is like a car with 4 cylinders. It is like an engine or an organism, which will operate when all four important players are working together. These are the Regulator Intermediaries Issuers Investors They are the 4 main pillars or actors and are like 4 cylinders of an engine. 15

17 They are working on different mechanisms, not only governed by rules and regulations but by market mechanisms and incentives, checks and balances and institutional checkups. But the framework is set by the regulator. From another perspective, consumer protection is not differentiated by 4 cylinders but by main objectives: Prevention Monitoring, supervision, and surveillance mechanisms Rescue mechanism and relief (in case of failure) Hence the selection of the topics on dispute resolution, mediation, and compensation However, l there were topics that could not be addressed in this conference, such as Corporate Governance of listed companies The role of media in creating transparency, protecting retail investor; Retail investor representation; and Self-Regulatory Mechanism. Mr. Giehler stated that, in the course of the conference participants will have a chance to discuss them bilaterally and hope to fix concrete action. Some cylinders in some countries are not working properly, including in Germany. Presently, answers are not there for all the questions. Looking forward, we would like to identify shortcomings and see where in Asia and Europe answers or good examples for learning and information exchange can be observed. Turn this into a concrete action of advisors, advisory services, training, further discussions in bilateral talks, study tours, and concrete implementation plans so that some of these issues can be addressed. Session 2: New Trends in Capital Market Regulation Speaker 1: Mr. Tajinder Singh Deputy Secretary General, International Organization of Securities Commissions (IOSCO) The International Organization of Securities Commissions (IOSCO) sets standards for securities regulation and helps members in capacity building, monitoring implementation, and looking at emerging risks. IOSCO s objectives are investor protection; fair, efficient, and transparent markets; and reduction of the systemic risk. 16

18 Six notable trends relevant to securities markets: 1. Bank lending to the real economy has been decreasing due to new regulatory initiatives. 2. Corporate reliance on securities markets has been increasing despite volatility. 3. Equity markets have experienced significant price appreciation over the last year. 4. In the search for yield, the market for high yield bond issuances has increased five-fold in four years. 5. Since the crisis, global regulation has caused OTC derivatives markets to undergo important changes. 6. Capital flows in emerging markets have increased substantially since the financial crisis. The single most important condition needed for securities markets to play an important role in financing the economy is that trust in the system has to be rebuilt. The systems and framework in which markets operate should be safe and solid and reduce systemic risk. Together with the G20 and the Financial Stability Board, IOSCO is working in this area (also called macro-prudential ) and ultimately protecting the investor by preventing a major blow-up of the financial system. IOSCO is now more pro-active in identifying emerging risks. It has come out with its first Securities Markets Risk Outlook and identifies four main risks from the point of view of securities markets: 1. Risks associated with the low interest rate environment and search for yield; 2. Risks associated with collateral management in a stressed funding environment; 3. Risks in the OTC derivatives space; and 4. Risks associated with reversal of capital flows to emerging markets. IOSCO has produced a staff working paper on the risks of cybercrime on trading venues and is working on the areas of crowd funding and bond market liquidity. Another key aspect is that the investor should feel confident that he or she will not cheated. This calls for increased efforts at investor protection, also a core IOSCO work. It is also looking at the use of automated or internet-based advice to customers and how suitability requirements are to be taken into account: investor education, enforcement, and sanctions. In this context, the IOSCO MMOU is an important tool and is the pre-eminent global standard for cooperation relating to enforcement matters. In terms of the regulatory responses to compensation-related conflicts of interest, the UK has banned third-party payments to advisors. In Europe, MiFID only permits third-party payments that do not create conflicts. Therefore, a number of jurisdictions are clearly going beyond pure disclosure. IOSCO is also looking at aspects of behavioural economics. To give one example of behavioural economics in an experiment carried out by the UK FCA, letters that were issued to consumers mentioning how they could claim compensation had a very low response rate. When changes were made to the letter by reducing the amount of text; explaining to readers that the claims process would only take five minutes; or by sending out reminders, the rate of response jumped by over ten percent. In summary, market-based financing is going to be increasingly important going forward. For this to happen, however, IOSCO will need to look at three important issues: regaining confidence by making the system safer; regaining investors trust through investor protection measures, proper corporate governance, and enforcement; and at the same time allowing markets to function in a globalized environment for the greater good of the citizens. 17

19 Speaker 2: Ms. Nicoletta Giusto International Relations Office Director, Consob Ms Nicoletta Giusto thanked the organizers for the opportunity to participate in the discussions and at the same time asked for indulgence as she joined the panel only at the very last moment. She started by making a reference to the issues raised by Mr. Tajinder Singh of IOSCO, regarding the general trends in regulation. She said that, although the conference is mostly about Investor Protection, it is also of paramount importance to the entire chain in the manufacturing and distribution areas. It is important not only to pay attention to the relationship between manufacturer and target market or distributor and investor but the entire chain as it will be impacted by the implementation of the reforms. One issue of key importance would be the OTC market reforms, which makes it obligatory to have central clearing, and reporting of bilateral transactions to the trade repositories. Another issue that will probably be touched upon in later session/s is related to trading markets wherein it is not just the surveillance of the market but that the rules/ reforms ensure that markets are able to provide liquidity for the instruments which are offered to the public. Further they have to be able to correct the price of these products so that the prices are not determined by self-fulfilling expectations but do go back to the fundamental s of the value of the instruments that are negotiated in the securities market. Ms Nicoletta added further that it s key in terms of investor protection in Europe. Before the recent financial crisis started, Europe was already confronted with the distribution of structured products to retail investors, at least in certain European markets. Also synthetic instruments such as synthetic ETFs started being negotiated and were made available largely to retails investors. Therefore regulators in Europe started discussing what is the best way of approaching investor protection from this view point so that the investors can avoid or at the end, not confronted with risk. 18

20 Panel Discussion: New Trends in Capital Market Regulation Moderator: Ms. Menaka Doshi, Corporate Editor, CNBC TV18 Panellists: Mr. Amarjeet Singh, Chief General Manager, SEBI Mr. Karl-Burkhard Caspari, Chief Executive Director, BaFin Mr. Tajinder Singh, Deputy Secretary General, IOSCO Ms. Nicoletta Giusto, International Relations Office Director, Consob Ms. Menaka Doshi: Regulators currently are still very busy fixing the problems thrown up by the global financial crisis. If they are very busy in doing it, then how are they going to be able to spot the next incoming crisis given that no crisis ever strikes at the same place? Mr. Karl-Burkhard Caspari: Keep restriction on capital requirement on banks Implement transparency Better data to draw out better conclusion where new risk arises Ms. Menaka Doshi: How completely consumed are you all by what went on during the global financial crisis and trying to fix what that crisis exposed as opposed to keep your eyes on an incoming weakness. 19

21 Mr. Tajinder Singh: It s really an important question and something which IOSCO is really concerned about. A lot of our time is devoted to plugging the loopholes of the past crisis. IOSCO has recently brought out a publication titled Securities Market Risk Outlook to address emerging risks. Ms. Menaka Doshi: Financial products are becoming more and more sophisticated where the communications regarding them needs to become simpler. Can you draw upon the experience of what SEBI has done in the last few months in investor protection to be able to take us through some of those challenges of walking the sophisticated product but simple communication line? Mr. Amarjeet Singh: Before answering that I am tempted to supplement to what Mr. Tajinder and Mr. Caspari said. The question that you raised is very valid. Will it help in dealing with the next crisis? We regulators are responsible for identifying the risk, and then managing/dealing with the risk for the sake of the market and investor. How do you do that? Here I would like to bring in what IOSCO has done and let me also mention IOSCO was the first agency to respond to the crisis in a very timely manner by coming out with eight additional global principles and two of those principles actually deal with the problem I am referring to, and those principles are principle 6 and 7, relate to systemic risk and the regulatory perimeter risk. We should develop some kind of structure and processes to regularly scan and look for emerging risk and prepare ourselves for dealing with that. Being involved in the Assessment Committee of IOSCO, I would like to mention here that the Assessment Committee has conducted a thematic review of the status of implementation of these principles. It would be a great idea to look into that report to ascertain the best practices in the area of systemic risk and the regulatory perimeter risk. Ms. Menaka Doshi: How do you as a regulator deal with the systematic issues that countries are facing today without stifling innovation that is so important for growth of the market and for the revival of the economy? Regulation vs. innovation! Ms. Nicoletta Giusto: I think it s a really difficult issue. Before the crisis innovation was good. We have to identify which innovation is good. We don t want to block innovation, but, at the same time, we want to be more on top of that and check what is disseminated throughout the market doesn t start another form of systemic risk. We have to have programmes for the protection of investors or for fairness of the market. 20

22 Session 3: Investor Education Speaker 1:Mr. Ashish Kumar Chauhan MD and CEO, Bombay Stock Exchange (BSE) Mr. Ashish Kumar Chauhan provided a broad overview of present status of financial literacy in India. He enumerated some basic facts about Indian financial markets. BSE has an investor base of 23 to 25 million (in a country with 1.27 billion people). Even though there are over 99,000 bank branches in India, the number of people having credit cards is just 2 percent. As against this, the penetration of mobile phones is impressive at approximately 993 million! Recently, India was placed at 15 out of 16 among Asia-Pacific countries in financial literacy index (MasterCard Index for 2013 H1). Some of the reasons for financial exclusion include the lack of basic education, lack of awareness or access to service providers, complexity and inadequate information and knowledge about products/ services, and inability to choose between alternate products /services. The Investor Protection Fund (IPF) set up by BSE in 1986 is used to compensate in case of defaults, offering free access to research reports via BSE website and investor education and activities related to it. In 2013, BSE carried out 1,557 Investor awareness programmes. It used SEBI-registered investors associations, newspapers, TV channels, and events /programmes to promote financial literacy. Average monthly access of BSE website is an incredible 50 million page views. Statistics show that the number of client registrations, beneficial owner s accounts, and franchises on BSE are increasing. Set up 25 years ago, the BSE Institute, a centre of excellence in financial markets, trains over 10,000 candidates and certifies over 40,000 professionals every year. It routinely offers postgraduate, under graduate, international, and certificate programmes. To develop financial capability to help participants make good financial decisions, BSE has used a mix of approaches to meet audience profile as below: Activity-based learning to build foundation math and finance knowledge and skills in a fun-filled manner among 1,000 primary schoolchildren Situational learning to build financial knowledge among 300 self-help groups Cooperative learning in a competitive environment as a driver to acquire and excel in foundational financial knowledge among 10,000 secondary school students. Experiential learning to make learners to experience through participation in mock stock trading among 5,000 college students. 21

23 Simulation-based learning to learn through mock trading without fear of making mistakes or losing money among professionals. BFSI (Banking, Financial Sector and Insurance) Sector Skill Council of India was set up to enhance skill development across the BFSI sector for enhanced efficiency, productivity, and sustained growth. It has a target to skill and certify 10 million people by Speaker 2: Dr. Kusumaningtuti S Soetiono Commissioner in charge of Financial Education and Consumer Protection, Indonesia Financial Services Authority Dr. Kusumaningtuti S. Soetiono presented Indonesia s plans to expand financial literacy in the capital market. She gave an overview of the present situation and discussed the country s national goals. She covered four distinct facets: 1. Growth of Indonesian Capital Market The capital market has grown steadily since 2002, with capital market capitalization to GDP ratio reaching a high of as on 22 October It has 479 listed companies as on 18 October The strategy of capital market development is to focus on three main areas: The deepening of capital markets by the development of capital markets as a source of financing and debt financing, enlarging of Islamic capital market products, and by improving the efficiency and credibility of trading infrastructure. Enhancing of market integrity through introduction of investor protection fund and skill development of market players. Improvement in law enforcement through improved intelligence, investigation, and coordination with other law enforcement agencies. 2. Importance of Capital Market The need for expanding the scope of financial literacy is obvious from the fact that the size of the consumer class is expected to go up by an additional 90 million Indonesians by This is the third highest projected growth in the world, next only to China and India. Similarly, as the life expectancy is projected to go up to 78 years (from 69 22

24 years in 2010), there is a need for enhancing financial literacy to help elderly people plan adequate retirement incomes. Further, the complexity of financial products also makes it imperative to improve financial literacy among the people. There is a specific need to educate the people about illegal investment schemes or Ponzi schemes (there were 89 illegal institutions in operation with 350 complaints, in January and August 2013). Lastly, a survey showed that the low level of participation in equities market, just 1 percent, is mainly due to low level of financial literacy. 3. Financial literacy survey A baseline financial literacy survey (report is to be made public on 19 November 2013), clearly showed that percent of population was not financially literate and only 0.03 percent were well literate in financial matters. 4. The National Strategy To meet future need, a national strategy that is inclusive, systematic, and measurable, involving all stakeholders and with easy access, is planned. It would involve development of a well literate society through a national campaign of awareness, knowledge, education, and skill development. It will also require strengthening and expansion of support infrastructure to meet the goals of national education campaign and development of appropriate financial products and services. Session 4: Disclosure and Transparency and other Regulatory Measures to Prevent Mis-selling of Financial Products Speaker 1: Mr. Moritz Beker Senior Policy Officer, Section INT 4 International Policy/Affairs Securities Supervision (BaFin) Mr. Moritz Beker spoke about Measures to Prevent Mis-selling of Financial Products: Recent Developments and New Trends in German and European Law. An important objective for regulators is investor protection. The regulations are made in the best interest of clients so as to prevent mis-selling. Several important improvements under German and European Law have been made in recent years including expansion of scope of supervision. With stricter laws, it is expected that there would be less need for regulation. Main parties involved in the sale of financial products are: Manufacturer, Distributor, and Client. Their main responsibilities are: Prospectus (by Manufacturer); Rules of conduct, Information Sheet, Advice Minutes Register, and Independent Advice (by Distributor); and to be well informed and economically self-responsible (by Client). 23

25 Recent amendments in German Law include: Information Sheet (July 2011): Distributor shall make available Information Sheet well before conclusion of transaction. The sheet shall inform the client in an understandable form about the product covering such issues as type, functioning, risks, prospects of repayment of the capital, yields under different market conditions, and the costs. Investment Advice Minutes (January 2010): Advisors shall keep minutes of Investment Advisory, which records client s objectives and the recommendation given by the advisor. Register for Investment Advisors: Investment Advisors who are reliable and have adequate expertise shall register with BaFin. In case of violations, BaFin can suspend them and not allow further activities. Independent Investment Advice: Advisors have to inform their clients if their services are offered on fee basis. They shall not receive any third-party payments (fees, commissions, etc.) and offer sufficiently large number of instruments/ issues. Focus of German policy makers so far has been on Distributors and Clients. In the coming period, it would be Manufacturers. European developments include legislative initiatives to strengthen investor protection. This includes the review of MiFID (Markets in Financial Instruments Directive), which was updated in 2011 to bring in more transparency, especially in type of service, third-party payments, costs, and risks. Stricter rules for investment advisory and portfolio management were introduced. It dealt with remuneration of employees and explicit intervention powers for ESMA (European Securities and Markets Authority) and national authorities. The Product Governance Rules for Manufacturers and Distributors require product design and overview, product testing, product approval, information disclosure, and post-sale obligations. Further, it also dealt with explicit empowerment to restrict and prohibit sale, marketing, and distribution of financial instruments /activities. Regulation of Packaged Retail investment Products (PRIPS), made it obligatory to prepare a Key Information Document (KID) for investment products (July 2012). This helps investors to compare different products and choose the most best. The proposals help in strategizing and provide for closer look at the market, adept supervision, stop fancy publicity on television and print media. The reason for investment should be real needs. Speaker 2: Mr. Stephen Po Senior Director, Intermediaries Supervision Department, Securities and Futures Commission (SFC), Hong Kong 24

26 Mr. Stephen Po of the Securities and Futures Commission (SFC) of Hong Kong made a presentation on the topic of Mis-selling of financial products. The presentation covered three aspects: Regime for information disclosure and transparency (key requirements), Reducing mis-selling of financial products (IOSCO s efforts); and major challenges ahead. A regime for information disclosure and transparency mainly involves, among other things, coming out with key information disclosure document (since product brochure is generally not read by most clients) by product issuers. The documents by product issuers shall give key facts, investment objectives and strategy, key features, fees and charges, any guarantee/ collateral, and scenario analysis /performance of the product. The regime for product distributors shall include providing of adequate disclosure of relevant material information to its clients, refraining from advice or deal in case of actual or potential conflict of interest unless it discloses the same and takes reasonable steps to ensure fair treatment of the client (for instance CoCos bonds offered by an arm of a private bank is a case in point), disclosing benefits received for distribution of investment products from product issuer, and informing the client if it is acting as principal or agent and its affiliation with product issuer. Product related disclosures include marketing materials and product key facts statements (KFS). The presentation also covered content and general principles of preparing of disclosure documents that was followed by a sample disclosure document for a structured investment product. Mr. Po suggested that reducing of mis-selling of financial products has become important with growing wealth accumulation worldwide (High Net worth Individuals (HNIs) increased 12 million in 2012 from 11 million in 2011, and overall wealth accumulated amounted to US$ 46 trillion). There is also a need for wealth preservation and to address investors demand for yield enhancement under low interest rate environment. In the context of investors having suffered large losses in recent years, IOSCO s efforts at enhanced regulation of selling of investment products assume significance. Specifically, Principle 4 of the 9 Principles set out by IOSCO in the report titled Suitability Requirements with Respect to the Distribution of Complex Financial Products published by ISCO in January 2013, about protecting customers from non-advisory services, is important. It makes it clear that the banks still have an obligation to their clients, even when clients come on their own and ask for a specific product. IOSCO is also in the process of reviewing the impact of technology in financial investments; i.e., automated advice and social media such as blogs, micro-blogs, Facebook, YouTube, LinkedIn, and Twitter; and also other regulatory issues like behavioural economics and emotional decision making by the FCA of the UK. The major challenges ahead include the 3P s: People (such as knowledge and behaviour and professional financial planners), Product (such as specific product regulation as in the UK and the allowing of use of monetary incentives like gifts for promoting investment products), and Practices (such as perceived conflicts of interest, commission or fee-based structure, ensuring suitability (through development of more accurate client profiles) and developments in technology (such as use of new IT medium and automated advice tools). Panel Discussion: Disclosure and Transparency and Other Regulatory Measures to Prevent Mis-selling of Financial Products Moderator: Mr. Ranjeet S Mudholkar, Vice Chairman and CEO, Financial Planning Standards Board India Panellists: Mr. Moritz Beker, Senior Policy Officer, BaFin Mr. Stephen Po, Senior Director,SFC, Hong Kong Mr. Yasuto Watanabe, Director International Financial Deputy Secretary General, FSA, Japan Ms. Nicoletta Giusto, International Relations Office Director, Consob 25

27 Mr. Ranjeet S Mudholkar: Stephen, There are 10 guiding principles of G20, which are accepted by the OECD, Finance Ministry, as well as IOSCO. How do you think that will help in consumer empowerment and investor protection? Mr. Stephen Po: This is a very big question. On our side as a securities regulator, we see the trust of financial institutions issue as important as far as the regulator is concerned, the trust discrepancy issue is between the industry, between the consumer, regulators, and the government. As mentioned in my earlier presentation, the issue that the whole industry is facing is that more and more regulations are imposed upon them. Not only that the investors and regulators do not trust the financial institutions. At the end of the day, I guess the thing that need to be done by the industry is that everyone working in the industry, together with the consumers, regulators and the government is repository of the trust so that consumers know that their interest will be taken care of by the financial institutions. Mr. Ranjeet S Mudholkar: Is transparency sufficient or do the regulators need to limit the retail investor choice? Mr. Yasuto Watanabe: I think it s a very important point. Transparency and disclosure obligation is key, which includes disclosure of the financial products, fees, and charges. In our case in Japan, on top of the disclosure requirement, we are taking approaches to ensure that distributors of financial products provide proper explanation and information about the product being sold. We think mis-selling problem mainly came from information asymmetry/information gap. How to address this information gap between the supplier and the retail investors? Why the disclosure requirement is not enough to fill the gap? So, we are insisting that distributors take up more responsibilities of explaining in detail to the retail investors, prior to the sale being made. 26

28 Ms. Nicoletta Giusto: It is a difficult question. The products are complex. Full prospects are not read by anyone. If they do, it is still a job for financial analyst. Key Information Document (KID) should prompt investors to ask advisor for more information and advice. We have to ban from time to time advertising that talks about guaranteed performance, etc. There is also greed involved, like in Maddoff s case. Of course, people who lost money were not retail investors, but the rich investors should have realized that it is too good to be true that they can receive such high yields. Due diligence should be practiced before distribution or selling of investment products. As Stephen said, we have to raise the industry standards especially since the financial crisis. Mr. Ranjeet S Mudholkar: How do you find and correct the measure between complete information and understandable information? What s your perspective on this? Mr. Moritz Beker: I think it is quite difficult to find the right balance between too much information and not sufficient information. I think this question depends also on the questions and facts, which clients the investor services are provided. Do we speak about a client who is not experienced in financial market? In this instance, it would be better to simplify the information, but I think the essential point is that relevant information is given to the client. And the relevant information, I think, is the information about the risk and the cost of the financial product. Session 5: Dispute Resolution Regime and Mediation and Arbitration Speaker 1: Mr. Robert Elsen Financial Counsellor (Representative of BaFin) German Embassy Beijing Mr. Robert Elsen spoke about Approaches to Out-of-Court Settlements, Chances, and Challenges. The Ombudsman concept started in Sweden in 1809 as Justilie ombudsman. An ombudsman is a representative of the people who strikes a balance between the government and its citizenry. It is independent of the government but directly linked to parliament. The goal is to make available impartial, easily accessible decision-making. Since 1970s several countries have adopted this model: The ombudsman dispute resolution system in finance was introduced in Germany in 1992 by the Association of Private Banks (Bankenverband, BdB) Banking ombudsman was set up in 1995 in India 27

29 German Insurance Industry set up ombudsman in 2001 Dispute Resolution Scheme was set up in Singapore in 2007 Dispute Mediation System was set up in People s Republic of China in 2011 The conventional dispute resolution mechanism in Germany is time-consuming, costly, and bureaucratic and incurs additional attorney costs. This has refrained aggrieved parties from going to court, thus curtailing protection and even lead to changing of business relationship by clients. On the other hand, Germany s ombudsman scheme is fast, offers easy access, and does away with costs to client. It also does not limit client s right to recourse since, if not satisfied, he is free to approach the court and the ombudsman s ruling is binding on financial institutions. The process involves: sending in of a written complaint, if admitted, the bank is told to respond (the client may comment on response). Thereafter, the ombudsman takes a decision that is binding (up to 5,000). Since introduction in 1992, more than 70,000 complaints have been received, with 7,179 in 2012 alone. The most common complaint was Inappropriate Investment Advice. Since it is a sensitive issue, a new law needs the advice be given in writing. Cases that are complex or where bank in question is not a member of the association or the complainant has already filed a law suit, etc. are not admitted. Of the4,414 cases admitted in 2012, 1,616 cases were resolved in clients favour, 1,044 cases in favour of banks, 520 cases resulted in compromise, and the rest are pending. Ombudsman has to be impartial with proven expertise, have integrity and sufficient knowledge of law and market conditions. Typically retired successful judges become ombudsman. The Singapore Monetary Authority set up the Financial Industry Disputes Resolution Centre as one-stop impartial and independent body for all individuals and sole proprietorships. Insurance claims up to S$ 100,000 and banking and capital markets claims up to S$ 50,000 can be settled. The process involves filing of complaint, mediation between client and financial institution (free of cost for client), and if mediation fails, adjudication by highly qualified, experienced judges or retired industry professionals. The outcome is binding on the financial institutions and the client pays a flat case fee of S$ 50 per claim and the financial institution pays a flat fee of S$ 500 per claim. Europe or the EU also supports a fair, effective, transparent, cost-efficient, and impartial scheme for out-of-court settlement. In 1998, the European Commission defined minimum standards of qualification and impartiality for out-of-court settlement, and, in 2013, it asked the member States to implement within two years an out-of-court settlement system for all delivery of goods and services within the EU and legal protection for cross-border transactions. The cases are to be resolved within 90 days of filing the complaint. Speaker 2: Prof. Dr. Günter Hirsch Insurance Ombudsman and Former President of the Federal Supreme Court of Justice, Germany 28

30 Prof. Dr. Günter Hirsch talked about the concept of ombudsman: issues in alternative dispute resolution, its organization, competence, and procedure and recent evolution in the European Union. Alternative Dispute Resolution (ADR): Idea of public ombudsman is based on the principle of mutatis mutandis in contractual relationships. It is set up to counterbalance structural weaknesses of the consumer compared to company so that both are on equal footing ( equality of arms concept of civil suits). The challenge is to ensure legitimacy, transparency, and resident friendliness of public administration. Ombudsman or ADR procedure resolves complaints in shorter duration, costs nothing or minor for complainant and the entire procedure is more comprehensible to layman with no need for lawyers. It corresponds with modern consumer protection and meets social responsibility. On the other hand, court proceedings are strictly formalized, costly, and take considerable time (especially if all stages of appeal are exploited). The banking transactions and insurance products are generally highly complicated in both economic and legal terms. In Germany, there are far more than 400 million insurance contracts (90 million of which are life insurance contracts). Most of institutions in the German securities sector (private commercial banks, the savings banks, the cooperative banks, the investment banks, and the public sector banks) offer an out-of-court procedure. Organization, Competence and Procedure: The Insurance Ombudsman (Versicherungsombudsmann e.v.) was set up in October 2001 by the German insurance industry as an independent institution. More than 95 percent of the insurance companies operating in retail business and the German Insurance Association (GDV) are members. It is assisted by an Advisory Council with substantial powers. The council has representation in equal numbers from consumer organizations and insurance companies, and also representation from members of parliament, science and insurance intermediaries, and supervision (BaFin). It decides on appointment and dismissal of ombudsman. The funding comes as annual contribution from members and case-based lump sum from the companies. Arbitration board has 50 persons including 21 lawyers, 14 insurance professionals, and administrative staff. To be an ombudsman one has to qualify to exercise the functions of a judge and his decisions are based on sole criteria of law and justice. The competence of ombudsman is limited to 100,000. Decision is limited to 10,000 and binding on company. In case of award of higher amount, it can only be a recommendation. If not satisfied with the award the policyholder is free to go to court. The complaint can be lodged by letter, over phone, by fax, or . Procedure involves receiving of complaints by insurance professionals, who then clarify concerns, if any, sort out inadmissible complaints, request for documents and opinions from insurers, and then transfer to lawyers (who are trained like judges) for decision. If they cannot settle the dispute, it is sent to the ombudsman. If decisionrelevant findings are not there, cases are sent to courts. The ombudsman receives between 17,000 and 18,000 complaints per year. Most complaints relate to life insurance (30 percent). The cases are resolved in three months, and, generally, a third of admissible complaints are successfully resolved in favour of complainants. Recent evolution in the European Union: Recently the EU has approved a directive on ADR and a regulation on Online Dispute Resolution (ODR). ODR will be an interactive, free-of-charge website in all languages of the Union. 29

31 Speaker 3: Ms Zia Mody Founder and Senior Partner of AZB & Partners Ms Zia Mody, spoke on Dispute Resolution Regime and Mediation and Arbitration. In India, the investor grievance redressal mechanisms are split up according to the concerned sector, since the Indian financial services industry has different regulators for different sectors. The banking and insurance sectors both have operational ombudsman schemes whereas a similar scheme has not yet been implemented for the securities markets. In 2003, the SEBI (Ombudsman) Regulations, was issued. It provided for the establishment of an office of ombudsman empowered to deal with complaints against any intermediary or a listed company or both. However, for various reasons these regulations were never operationalized. Investors in the Indian securities markets have a general right to approach three forums in respect of their grievances: 1. SEBI by way of a complaint; 2. the court having competent jurisdiction; and 3. consumer forums. However, while SEBI is open for investors to make complaints, it is not legally bound to take cognizance of such complaints. At present, there is no consolidated investor grievance redressal mechanism that extends across all market participants and is specifically targeted towards the securities market, akin to an ombudsman scheme. Grievances vis-à-vis listed companies and intermediaries registered with SEBI: The primary mode of investor grievance redressal for routine complaints is the SEBI Complaints Redress System (SCORES), introduced in It is a web-based, centralized, grievance redressal system that enables investors to lodge and follow up their complaints online. Listed companies are also required to constitute the Shareholders / Investors Grievance Committee under the chairmanship of a non-executive director to specifically look into complaints related to transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends, etc. Grievances vis-à-vis stock brokers: The exchanges have Investor Grievance Redressal Committees (IGRCs) or Regional Investor Complaints Resolution Committees (RICRC), which act as mediators to resolve claims, disputes, and differences between stockbrokers and complainants. These committees are required to comprise independent persons with qualifications in the area of law, finance, accounts, economics, management or administration, and experience in financial services, including securities market and should include at least one technical expert for handling complaints related to technology issues. Exchanges are to ensure that all complaints are resolved within 15 days. In case not resolved, the conciliation process would start. In case it is still not resolved, the exchange gives a time of seven days to the stock broker to inform the exchange whether he intends to pursue the next level of resolution; i.e., arbitration. Exchanges having nationwide terminals are required to provide arbitration facilities, including appellate arbitration, at all four regional centres. Either party aggrieved by an arbitral award may appeal to the appellate panel of arbitrators of the exchange against such award before the 30

32 appellate panel of arbitrators. A party aggrieved by the appellate arbitral award may file an application to the court of competent jurisdiction. Investor Protection Fund: SEBI constituted its Investor Protection and Education Fund (SEBI IPEF) in It is to be utilized for the purpose of protection of investors and promotion of investor education and awareness. Similarly, the stock exchanges too have constituted their respective Investor Protection and Education Funds. In conclusion, even in the absence of an operational ombudsman scheme, SEBI has done an excellent job of addressing complaints. As per SEBI, during the financial year , 54,852 grievances were resolved. During , a total of 26,195 e-complaints were received. For a market as large and diverse as the Indian market, these numbers speak volumes. Panel Discussion: Dispute Resolution Regime and Mediation and Arbitration Moderator: Mr. Robert Elsen, Financial Counsellor, the Ombudsman in Germany, German Embassy, Beijing Panellists: Ms Zia Mody, Founder and Senior Partner of AZB & Partners Prof. Dr. Günter Hirsch, Insurance Ombudsman and Former President of the Federal Supreme Court of Justice, Germany Mr. P K Bindlish, Chief General Manager, SEBI Ms Wang Liyuan, Junior Technical Advisor, GIZ, China 31

33 Mr. Robert Elsen: Mediation and arbitration can take a very long time, three to five years, with the judgment going to higher courts. It appears that the mediation and arbitration is shifting to SEBI, the regulator. What are your views on the same? P K Bindlish: SEBI has instituted a system wherein the complaint is received by the stock exchange, which directs the respective intermediary to respond to the complaint, within 15 days. The stock exchange tries to mediate between the intermediary and the investor/s. If it is not resolved, it goes to IGRC (Investor Grievance Redressal Committee) of the stock exchange. 15 days are given to IGRC to mediate/resolve the dispute. Generally, 90 percent of cases are resolved at this stage itself. If it is not settled amicably in the manner, earlier the process was that, the IRGC was referring the matter to arbitration. SEBI found that the earlier system was not robust and hence it put in place a time-bound process. Generally, the investor is at a disadvantage as the intermediary may not be in a hurry to settle the issue at the earliest. Hence, provisions are made that IGRC, on conclusion of the proceedings, may ascertain the value of the claim amount admissible to the investor, and the stock exchange will block the amount from the deposit of the concerned member. The stock exchange gives a time of seven days to the member from the date of signing of IGRC directions to inform the stock exchange whether he intends to pursue to the next level of resolution; i.e., arbitration. In case the member opts for arbitration, then 50 percent of claim value as indicated by IGRC or Rs 75,000, whichever is less, is released to the investor as a monetary relief from the Investor Protection Fund (IPF) maintained by the stock exchange. Intermediary can file arbitration within 30 days. If the IGRC decision goes against the investor, he can go to arbitration within 30 days. No arbitration fee will be charged to the investor by the stock exchange, arbitration fee will be paid from the IPF for claims up to Rs 1,000,000. However, arbitration will have to be paid by the intermediary. The arbitration decision has to be conveyed in three months. In exceptional cases, an additional three months may be given. If the investor again wins in arbitration, he receives remaining 50 percent of value of claim from the IPF. The intermediary, if he wishes, can go for appellate authority within seven days. After appellate, the intermediary can go to the court. Since it is possible that the broker and investor may collude to misuse IPF money, SEBI has stipulated that not more than Rs 500,000 can be given to any complainant in a year. If the decision goes against the investor or complainant, and if he does not repay the amount received, his unique client code on exchange is blocked, and also whatever scrips he holds in his demat account will be blocked. Arbitrators are independent. They are drawn using an online system from a panel maintained by major stock exchanges. This way collusion between arbitrator and intermediary is avoided. Mr. Robert Elsen: In a nutshell, please tell us your experience with the establishment of ombudsman scheme in China? Ms. Wang Liyuan: I am working with GIZ China as a technical advisor and our cooperation with Chinese authorities started since 2010 when GIZ started a project on investor protection with CSRC. Besides that project, we worked together in 8 areas, one of which is automotive dispute resolution. Here we mainly bring along German expertise from German private commercial Banks association. As Prof. 32

34 Hirsch said earlier, they have an Ombudsman system of settlement for the private banks. International experts from Germany and local Chinese people started a research program on dispute resolution and also on International competitiveness study, on what is happening around the world. This helps Chinese partner better understand their model. In 2011, a mediation committee was founded under the Security Association of China. They design the rules based on the data or information collected. Local association of securities sector also play very important role. In each province, there is one local association with proper facilities and infrastructure to provide access to the investors to settle down their dispute right nearby their home. Thus, they have a very good framework in place. They have started a recruitment campaign and now they have around 100 part time mediators. Q & A Participant 1: What is the best way to ensure independence of the ombudsman? Prof. Dr. Gunter Hirsch: An ombudsman should have a very high reputation in the country. Organization of consumers should take part in the election/selection of the ombudsman. Procedure of the ombudsman should be really transparent; an ombudsman should publish his decisions. An ombudsman s work should be controlled by an advisory council in which consumers should also be the representatives. Participant 2: Can we get some perspective from the German side on how you do a cost benefit analysis for a measure like the ombudsman? Prof. Dr. Gunter Hirsch: All the details and limitation in the ombudsman procedure are not written in the law. These are all decided at the private level. They are members of private association and everything is decided at the private level. In summary, many institutions and the majority of insurers in Germany have voluntarily agreed to settle possible disputes with the help of private mediators, so called ombudspersons. The ombudspersons themselves are independent. Participant 3: Sectors/Factors influencing the ratios of decisions in the mediation process in favour of the client? Mr. P K Bindlish: According to my experience, a lot of cases lodged by the clients are due to not having the proper documentation or they do not understand issues in a proper manner. If they are guided properly, complaints can be reduced, improving success complaint resolution ratio. To avoid the instances of unauthorized trading disputes, SEBI has directed stock exchanges to send SMS and/or s to the investors at the end of the day so that investors can be informed, at the earliest, about the trading in their accounts. 33

35 Mr. Wolfgang Buecker Head of Financial Systems Development GIZ Germany) Day 1: Wrap-Up Spokespersons from many emerging economies in Asia, Southern Africa, and Latin America always say that international conferences talk mainly about the euro crisis. But the emerging economies don t want to talk only about the euro crisis because they have their own topics and issues. There were some images and pictures that were used to describe concepts during the day such as: The four cylinder engine picture by Thorsten Giehler. Electricity picture by Mr. Caspari, who spoke about first finding the right plug and then link it properly to the country context. In reality, often it is difficult to find the right plug and bring the work streams together. Referring to the debates, IOSCO principles introduced some new international standards in banking as well as in the securities market. It is also important to understand how to apply these standards in our financial service market condition of the countries. Balance was the word often used besides the word trust. The two balances or two perspectives of balances are: Regulation on one side and innovation on the other. Is there a rush to over-regulate? This is one of the main balances that will continue to be the main challenge. Issue of financial sector stability and financial inclusion through financial literacy. This is called two sides of the same coin. Also interesting was the use of media for school education. It was nice to see this from Mr. Ashish Kumar Chauhan of BSE. They created a baseline to properly measure the impact of media trainings. Movies seem to have a very clear and effective message. Mr. Stephen Po talked about behaviour of people to participate in the financial sector. He said that they want simple products: the right products for the right people. 34

36 The last session discussed the need for good formats for conflict handling and to solve disputes; e.g., ombudsman system. In conclusion, these balances will keep everyone busy in the coming years. I am quite confident that right people are dealing with these issues. Implementing all these properly is a big challenge and will continue to be so. Session 6: Investor Compensation Funds CONFERENCE PROCEEDINGS Day 2 Speaker 1: Mr. Thorsten Giehler Programme Director, Emerging Markets Dialogue Asia, GIZ Mr. Thorsten Giehler made a presentation on Investor Compensation in Germany the compensation scheme of securities trading firms (EdW) and the European Framework (on behalf of Mr. Dirk Cupei). The issue of investor compensation was taken up in the EU in 1997 to build confidence in capital market and protection of investors. German Act to Deposit Guarantee and Investor Compensation (EAEG) was passed in July Under EAEG three funds were set up: EdW (securities trading firms), EdB (Investor compensation of German banks), and EdO (Investor compensation of German public banks). EdW deals with insolvencies in small institutions and companies. Its members include securities trading firms (financial service providers, non-deposit-taking banks, and capital investment firms offering individual asset management services). It has 781 members and is supervised by BaFin the Federal Financial Supervisory Authority. It is funded by a membership fees and an annual contribution. Between 1999 and 2008, the annual contribution was around 3 million and 5 million. It compensates 90 percent of liabilities from securities transactions to a maximum of 20,000. No compensation for faulty advice. A compensation of around 4.7 million was released in seven cases or 980 investors. Case of Phoenix Kapitaldienst GmbH the German Maddoff case: Around 30,000 creditors from around 60 countries were given a total compensation of around 260 million. To meet the outgo, a special contribution totalling 28.7 million was collected in December 2007 and the German Finance Ministry granted 128 million credit line to EdW to finance partial compensation payments. To avoid risks, on-site checks and evaluation of 35

37 documents followed. Institutions are required to file annual accounts including auditor s report. From 2010, checks are carried out by Deutsche Bundesbank (German Central Bank). European Institutional Framework: EU directive on investor Compensation stipulated one to two investor compensation schemes per country. Europe has 34 Investor Compensation Schemes (ICS). Deposit Guarantee Schemes (DGS) are set up for banks. Levels of coverage of ICS and DGS are 20,000 and 100,000, respectively. Cross-border compensation: investor compensation has to cover also investors at branches set up in other countries (home country principle). Where level of compensation in host country exceeds home country levels, host country has to compensate supplemental compensation. European Forum of Deposit Insurers (EFDI) was set up in 2002 by 25 Guarantee Systems in Europe to enhance cooperation and share experience and information within and outside Europe and on DGS and ICS. In 2011, GIZ facilitated the signing of a MoU with the Chinese SIPF under EFDI. There are 57 members of EFDI in 44 countries with 11 ICS as associates and the ICS group consists of 34 members. Speaker 2: Mr R Sundararaman Chief Business Excellence and New Products, National Stock Exchange of India (NSE) Mr. Sundararaman spoke about Investor Protection Fund in India. The idea of Investor Protection flows from the regulatory framework. The primary role of regulator is investor protection. The preamble to SEBI Act says.the interest of investors in securities and to promote the development of, to regulate the securities market, and for matters connected therewith or incidental thereto. The regulatory frameworks and practices are oriented towards retail investors and there is a progressive transition from investor protection to investor empowerment. Nearly 50 percent of trade on exchanges comes from retail. Trade terminals are there in 300 to 500 cities with wide participation. The Central Government stipulated the setting up of Investor Protection Fund (IPF) by stock exchanges vide notification dated August Maximum compensation of Rs 1,500,000 per investor per default is the limit. SEBI (Investor Protection and Education Fund) has set broad guidelines that facilitate regulatory overview, information transparency and structured processing, ease of access for claimants, and facilitation of claim 36

38 resolution. Funding is received as 1 percent of the listing fees on a quarterly basis. Also 100 percent of interest earned on the 1 percent security deposit kept by the issuer companies during IPO, the difference in amount of auctions/ closeout price, various penalties collected from members, contribution from trading members based on transaction value, etc. Experience so far is that there is not much pressure on the IPF. Panel Discussion: Investor Compensation Funds Moderator: Mr. Thorsten Giehler, Programme Director, Financial Sector Reform, China Panellists: Mr. R Sundararaman, Chief, Business Excellence and New products, National Stock Exchange of India Mr. Hoang Hai, Vice General Director of Issuing Department of Securities State Commission, Vietnam Mr. Somasekhar Sundaresan, Partner, J Sagar Associates Mr. Thorsten Giehler: Vietnam is in the process of setting up an investor compensation scheme. Please give us some insights about the challenges. Mr. Hoang Hai: We faced a lot of challenges in setting up investor protection fund. But, two years from now we will be able to set an investor protection fund scheme. 37

39 Mr. Thorsten Giehler: India is one of the earliest countries to set up investor compensation fund scheme. We have learnt that funding is not only coming from the securities companies but also from the issuers and the exchange. What is your perception about the funding mode in India? Is this a way to provide enough funding? On the other side, will it make transactions too costly when you ask provisions from so many parties, which are in the transaction activities? What is your point of view in terms of Indian funding structure? Mr. Somasekhar Sundaresan: In my view, investor protection fund should only be used in a bankruptcy situation where there is a market risk, default, or systematic failure. Q & A Participant 1: What are the success factors defining the Investor Compensation Funds? Mr. R Sundararaman: Proactive regulatory framework, which is investor-oriented and manifesting itself in a form of very robust mechanism. The very strong surveillance and compliance mechanism. The efforts from everybody, including the regulators in educating the investors. You have to educate people to save them from Maddoff. Don t encourage fraud. If there is a fraud in the capital market, why should a tax payer s money be used. So, the market should be self-sustained. I don t think the government should cut a cheque to underwrite investor protection. The government should not fund this initiative. Participant 2: In case the investor protection funding scheme is separated from the stock exchanges, do they have the Authority to investigate or monitor their members in order to avoid bankruptcy? Mr. Somasekhar Sundaresan: India has multiple funds. These funds are well regulated. Mr. R Sundararaman: I don t think bankruptcy could be prevented. But we can ensure to secure the system. Participant 3: What action does the exchange take to recover its funds after they claim to the securities? Mr. Somasekhar Sundaresan: When everything else fails, then there is bankruptcy and only then do we touch the investor protection fund. Participant 4: In India, there is investor representative association, supported by SEBI. Any kind of similar set up in Germany? 38

40 Mr. Thorsten Giehler: We have retail investor associations that are trying to get the voting rights to stand for the Investor General Assemblies of the listed companies. We also have consumer association that represents consumers interest, specifically investors in terms of banking, insurance, and securities market. 39

41 Session 7: Stock Exchange Surveillance Speakers 1: Mr. Michael Heinrich Zollweg, Head of Trading Surveillance and Mr. Carl-Frederik Scharffernorth, Senior Trading Surveillance Analyst, Deutsche Börse AG The duo from Deutsche Börse AG spoke on Stock Exchange Surveillance and Investor Protection Role, goals, targets, challenges, and more. The Supervisory Structure in Germany involves Federal Financial Supervisory Authority (BaFin), Exchange Supervisory Authority (BAB), and Trading Surveillance Offices (TSOs). BaFin looks into issues of market abuse (insider trading and market manipulation), supervision of disclosure requirements, supervision of code of conduct in the exchanges, international cooperation and supervision of credit institutions and financial service providers. BAB looks into issues of supervision of legal provisions and proper conduct of exchanges, granting permission to operate exchanges and approval of their rules and regulations and supervision of exchanges, operating companies, entities relating to exchange business. Both administrative and civil laws are applicable to exchanges. Each exchange has to have a TSO. It is subject to administrative law. TSO reports to BAB (state level regulator). The areas of competencies of the TSO includes: to obtain and review documents, s, and telephone records; question market participants; request disclosure of client data and positions; impose fines; and initiate independent investigations. Triggers for action may include: data, order data, market information, data analysis, alerts, complaints, inquiries, and onsite audit. Investor hotline for whistle blowers is set up by TSO. There is a need to maintain market integrity. Challenges in market supervision have increased. Because of Algo trading, the marginal costs of trading are coming down, but marginal costs of surveillance are increasing. Surveillance on aggregated data, lack of capability for scaled investigations, erosion of regulatory set-up, and responsibility of traders (machines) are all adding to the problems. High frequency trading seems to be an issue. Algo trading exploits interdependencies of products and markets and more dependencies affect economics of surveillance as investigation and detection efforts increase. So, for Investor Protection, it is very important to have full transparency. Surveillance depends on triggers that are exceptions and significantly caused by an entity/ individual or group of entities/ individuals. In the perspective of an ideal world of frontline surveillance, enhanced semi-automatic requests and responses, the first step in this is to develop machine readable surveillance! Enhance data and retention requirements of those using HFT /Algo. German HFT Bill stipulates measures and procedures to regulate 40

42 Algo trading and HFT. Some of the challenges in Algo /HFT common surveillance include the lack of historical patterns and new perpetuators. Speaker 2: Mr. Akiyoshi Maruyama Oversight Intelligence, Market Surveillance Division, Securities and Exchange Surveillance Commission, Financial Services Agency, Japan Mr. Akiyoshi Maruyama spoke on Recent Trends and Investigation of Market Misconduct in Japan. Launched in 2010, the Arrowhead next-generation equities matching engine achieved a latency of one millisecond for order acceptance response. This resulted in increased algorithmic and high-frequency trading on Tokyo Stock Exchange (TSE). Consequent increase in liquidity also increased risks. Unfair trading, including market manipulation and insider trading, is prohibited by the Financial Instruments and Exchange Act (FIEA). The financial exchanges have a duty to investigate unfair practices. They may entrust the selfregulation related services to Self-Regulation Organization (SRO). Market surveillance is done with cooperation between Securities and Exchange Surveillance Commission (SESC), SROs, and Securities Houses. In 2012, SESC investigated 973 cases (84 market manipulation, 875 insider trading cases, and 14 other cases) and declared 32 cases as unfair trading. 41

43 Market manipulation is defined by FIEA as trading financial instruments by using fraudulent means, schemes, or tactics. These include spreading false or misleading information about a listed company, manoeuvring, churning, spoofing or layering, and wash trading by investors in collusion. The guilty party may face criminal charges and administrative monetary penalty concurrently. Case study of Hokuetsu-Kishu Paper : A day trader generated 2 million orders within 79 minutes (on 25 January 2011). He placed spoofing sell orders to manipulate the investors who use algorithmic trading. In this case, the SESC recommended Financial Services Authority (FSA) to impose monetary penalty. Insider trading is defined as transactions where someone with a connection with a listed company (corporate insider) uses the information that he/she acquired through the exercise of his/ her employment, profession, or duties to conduct an illegal sale or purchase of the company s stock. Under FIEA, corporate insider who has obtained undisclosed material facts such as to be released financial information, merger and acquisition, offering or offering of shares, and so on are prohibited from purchase /sale of specified securities, etc., (including options) of the company until the material facts is disclosed. Insider trading may invite criminal charges and administrative penalty concurrently. Case study of Japan Advisory : Elpida Memory Inc. (listed on TSE) was to launch a public offering. An employee of securities house hinted fund managers in Japan Advisory LLC. They held stocks of Elpida Memory Inc. to make profits. SESC recommended FSA to impose penalty on November 2, A new type of crime is fraud and misconduct in fundraising through stock exchanges. This happens in primary market as well as secondary market. It involves scrupulous planning to arrange a comprehensive scam where misconducts in primary and secondary markets are carefully connected. Seven cases have been filed since July Case study of Paint House : In this case, the arranger did not use his own money but just recirculated the cash paid-in to exercise the warrants. He also got money to sell the underwriting stocks in the secondary market. SESC filed a criminal complaint against the arranger. He was sent to 30 months in prison and also fined JPY 4 million and surcharge of JPY 301 million on 18 February In closing, ongoing technological innovations require regulators worldwide to be always alert to new forms of unfair trade and market manipulations. It is very helpful to share each country s experience. International cooperation among regulators is indispensable in oversight of increasing trends in cross-border market misconduct. 42

44 Speaker 3: Dr.V R Narasimhan Chief Regulations, National Stock Exchange of India Ltd Dr Narasimhan made a presentation on Market Surveillance and Investigation in stock exchanges. He said that Surveillance and Investigation is a challenge since 15.6 million investors participate on Indian stock exchanges and there stocks listed on exchanges number 6000!.The average number of segment wise trade is also large at million trades in capital markets and million contracts traded in futures and options segments. There are 198 approved algo traders. A number of safety measures are in place to prevent flash/spikes at both Member and Exchange level: The Member level safety measures include: Review and defining of limits by Member; Quantity and value limit for each order; User value limit for each User ID; Branch value limit for each branch ID; Security wise limit for each User ID; Spread order Quantity and Value limit and Mandatory system audit requirement. The Exchange level safety measures include: Price bands dynamic and fixed. Quantity freeze check for single order exceeding a specified limit; Index based market wide circuit breaker (computed daily). The two phases of surveillance are Alert Phase and Analysis Phase: Alert Phase of surveillance include: Real Time Online and Non-Real Time surveillance and Pattern Recognition. Analysis Phase of surveillance include: Trade Related Analysis and Member and Client Analysis The frequency of surveillance is on real time online or non-real time basis. The Real time online surveillance include: Price variation in scrips; Volume variation in scrips; Client/ Member concentration; Large order cancellations; Clients consistently executing trades away from LTP; Unexecuted orders away from LTP and Same group of clients on both sides of trades. The Non-Real Time surveillance include: News bases alerts (insider angle); High-Low alerts; Media recommendations; Shareholding pattern changes and Changes in pledge levels. The Surveillance focus involves Pattern Recognition for detection of market abuse and includes: Insider trading; Wash sales; Front running; Marking the close; Pump and dump; Circular trading and Media recommendations. 43

45 The systems and tools that are available with the exchange for surveillance include: Online Real time Stock Watch; Data Analytics; Statistical models; Business objects; case management and Market Replay. The surveillance is carried out across market in coordination with other exchanges and regulator. The uniform surveillance measures followed by the exchanges include: Alerts to trading members; Price bands review; Trade for Trade segment review; illiquid securities classification /review and Reports to SEBI. Wherever necessary, surveillance is followed by Investigation. The triggers for Investigation include: Alerts generated by market surveillance; SEBI referrals; Pattern recognition models; Rumour verification and Complaints. The process of analysis, once alert is sounded, involve: Preliminary analysis to decide if the case is to be taken up for further action. If so, then initiation of detailed analysis including checking of KYC documents etc and Issue of a caution letter. Dr Narasimhan finished his presentation by narrating a recent successful case that resulted in regulatory action as below: A set of clients were observed to be holding significant long Futures open positions in a scrip. On Expiry day, price moved significantly in the last three minutes of the trade. One set of clients placed large unexecutable buy orders significantly below the last traded price, whereas another set of clients placed large un-executable sell orders significantly above the last traded price i.e. padded the order book. These orders were modified in the last 3 minutes of the trade to make them executable and they increased the price of the scrip significantly and also influenced the weighted average price of the scrip. Analysis revealed that the set of clients were related to each other and earned Positive Square off difference on their net long positions. The case learning s were disseminated to trading members for creating alert for future and for widespread awareness. Some of the other Cases that came out of surveillance and investigations include: Insider information (wherein there was drop in profits but increase in other income); Circular trading of shares to pump up volumes; Malicious synchronized trading and Front running of orders placed by Mutual fund schemes. Panel Discussion: Stock Exchange Surveillance Moderator: Mr. Michael Heinrich Zollweg, Head of Trading Surveillance, Deutsche Börse AG Panellists: Mr. Akiyoshi Maruyama, Financial Services Agency, Japan Dr.V R Narasimhan, Chief - Regulations, National Stock Exchange of India Ltd Mr. Carl-Frederik Scharffenorth, Deutsche Börse AG 44

46 Participant 1: In exchanges like Deutsche Börse, are corporates and intermediaries or merchant bankers are looked upon as the ones that bring risk to the retail investors? Mr Michael Heinrich Zollweg: It is a system and a structural issue. We have monitoring and surveillance mechanisms. We check the prospectus to see if it is a valid company, and if they have given right information to investors. If there was a case, like a segment of a company said it is a start-up, and they did not have a prospectus, and they were found indulging in wrong practices like cold calling, suspicious trading, pump and dump trading, account hacking, or IT was closed down, sometimes stopping trade for two weeks helps. People get nervous and start thinking what is happening. Participant 2: Is there some whistle blower policy in international markets? Is there a plan to introduce the same in India as well? Dr V R Narasimhan: The whistle blower policy refers to laws and policies meant to protect anyone who exposes alleged wrongdoing. In India, many corporates also have such policy in place. It is already in existence. Participant 3: Can you throw some light on regulation of Algo trading and High Frequency Trading (HFT) in India? Dr V R Narasimhan: In India, a member doing Algo trading has to take approval from the exchange. He has to explain the strategies. 45

47 Participant 4: Can you design a system that can be used to prevent wrongdoing or manipulative trade in the market? (May be something like a watch trade) Mr. Carl-Frederik Scharffenorth: It might be a vision but eventually we could go there. 46

48 Closing Session Mr. Karl-Burkhard Caspari thanked all the participants. He said he would call it a celebration day. Both days witnessed long debates and long meetings. Various items and issues were highlighted in the keynote speech and conference fulfilled the task of informing each other and learning from each other. He was happy to record that this is the most valid outcome of the meetings. It was really a Regional Conference with representatives from Indonesia, Sri Lanka, Mongolia, Maldives, Japan, and Vietnam. Mr. R K Padmanabhan expressed sincere thanks and gratitude on behalf of SEBI to BaFin and GIZ for all the support and collaboration in organizing the Regional Conference on Investor Protection in capital markets. The conference saw 34 participants from 12 countries and many participants from India over the two days. He spoke about Investor Protection as the root of every regulatory activity because nothing is as important as the protection of investors. He also elaborated on differences between Whistle Blower and Informer. He foresaw future challenges as technological supervision and transparency in Algo trading. Mr. Thorsten Giehler said that he wants to focus mainly on what comes next because he thinks it to be the most important thing. During the conference several issues were discussed, such as preventive measures, surveillance, supervision, regulatory measures, and relief measures like mediation and compensation. In all six topics were discussed during the conference. If more topics like corporate governance, etc., were included, the topic of investor protection would have been very large to handle in a short time. If all experiences and the lessons learnt are put together, then best concepts are already on hand. In this context India is very much advanced in some cases like Investor Compensation and Stock Exchange Surveillance, whereas in other cases other countries might be interesting examples, like in the German example in Mediation. 47

49 48

50 Glimpse of the Conference 49

51 SPEAKERS PROFILE Mr. U.K. Sinha, Chairman, Securities & Exchange Board of India Mr. U.K Sinha was appointed as Chairman of Securities & Exchange Board of India with effect from February 18, Mr. Sinha, formerly from the Indian Administrative Service, brings with him rich experience in the financial markets for more than a decade. Mr. Sinha, has held several responsible positions with distinction in the State and Central Governments. He was Joint Secretary (Banking) and Joint Secretary (Capital Markets), Ministry of Finance, Government of India. He was also the Chairman of the Working Group on Foreign Investment in India formed by the Government of India. He was a member of several committees set up by the Government of India including the Committees on Liquidity Management, Foreign Institutional Investors, Corporate Bond Market and Investor Protection. Prior to taking over as Chairman at SEBI, he was Chairman and Managing Director of UTI Asset Management Company Limited and also Chairman of Association of Mutual Fund in India. He has actively contributed to the financial sector reforms in the country. He is also credited with starting the micro pension movement in India. Mr. Karl-Burkhard Caspari, Chief Executive Director and member of the Executive Board of the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistung-saufsicht - BaFin). He heads BaFin s Securities Supervision/Asset Management in Frankfurt. Mr. Karl-Burkhard Caspari is also member of the Board of Supervisors of the European Securities and Markets Authority (ESMA) and of the Executive and Technical Committees of the International Organization of Securities Commissions (IOSCO). With a total of more than thirty years of working experience in the fields of securities law 50

52 and supervision, he has served as head of the Kreditabwicklungsfonds section (fund for the management of debt of the former GDR), the stock exchange/investment law section and the sub-division for banking, insurance, investment, stock exchange and securities supervision at the German Federal Ministry of Finance before taking up his current position. Mr. Stefan Helming Country Director Gesellschaft für Internationale Zusammenarbeit (GIZ) India Mr. Helming has done a post graduation in international development from the German Development Institute, Berlin (Deutsches Institut für Entwicklungspolitik) and has studied economics at the Albert-Ludwig-University in Freiburg, Germany. Internships included stations at the Federal Ministry of Economic Cooperation and Development amongst others. He was responsible for the Technical Backstopping for GIZ's worldwide water and sanitation programs as the Director of GIZ Water Division. He was also the Director of Corporate Policy Department and Department of North Africa and Middle East in the GIZ Office in Eschborn. He headed the GIZ IS in Ethiopia, which was the largest Country Program for GIZ IS for four years. He is currently the Country Director GIZ in India since April Mr. Thorsten Giehler, Programme Director Financial Sector Reform, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) China Mr. Giehler is the Programme Director of the Financial Sector Reform Programme of Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) in China. He moved to China in 2006 and has headed in the last seven years several Sino-German intergovernmental projects with the China Securities Regulatory Commission on the topic of Investor Protection and with the China Insurance Regulatory Commission on Consumer Protection. He also spearheaded the Sino-German Projects with the Peoples Bank of China on the topic of Microfinance, asset pricing, macro prudential supervision and real estate finance among others. Sino-German projects with the Postal Savings Bank of China on Micro and SME Finance and with the Tianjin Municipality on Property Rights Exchange Reform and Financial Centre Cooperation were also headed by Mr. Giehler. Additionally he has been working with the Financial Office in Inner Mongolia on Micro, SME Finance and 51

53 Green Finance. Mr. Giehler worked as a Financial Sector Specialist at the GIZ headquarters in Eschborn before moving to China. He previously worked for the Food and Agriculture Organization of the United Nations in Rome, Italy and for the German Development Institute in Berlin. Mr. Giehler studied in Germany and Venezuela and has in the past years published several professional articles on development finance. Mrs. Menaka Doshi, Corporate Editor, CNBC TV18 Menaka Doshi has been a business journalist for over 17 years. An economics graduate from St. Xavier s College, Mumbai, she started her professional career with television features and production company TV18 in She moved from being a business features reporter on India Business Report (BBC) to a business news reporter on India s first business news television channel CNBC TV18 - when it launched in She has since then covered several corporate beats and hosted many flagship shows including India Business Hour, Cutting Edge, Young Turks, Realty Check, Rules Of The M&A Game, Enterprise Inc, Riders In The Storm, Business Sutra Menaka is currently Executive Editor, CNBC TV18 she hosts a daily India markets show Closing Bell and a daily show on global markets Your and is host and editor of The Firm - India s only show on corporate law, tax and audit matters. She also writes an occasional column for the Financial Express titled Equal & Opposite it explores business practices prompted by legal & regulatory action and vice versa. In , Menaka was awarded the first Ramnath Goenka Excellence in Journalism Award in the category of Business & Economic Journalism (Broadcast). Prior to TV18, Menaka worked with Plus Channel, Spenta Multimedia, Sterling Newspapers & Ogilvy & Mather, in a series of summer jobs and long period internships. 52

54 Mr. Tajinder Singh, Deputy Secretary General, International Organization of Securities Commissions Mr. Tajinder Singh is currently Deputy Secretary General of the International Organization of Securities Commissions (IOSCO). He was previously Head of International Affairs & Human Resource Development and Executive Assistant to the Chairman in the Securities and Exchange Board of India (SEBI). Mr. Singh comes from the Indian Administrative Service and has held various positions in the Ministry of Finance in the Government of India, as well as handling a number of assignments for the government in the financial and other sectors. He has over 20 years of experience at senior leadership positions in different organizations dealing with strategic issues in regulation, finance and administration, and significant domestic and international experience dealing with Government and regulators. Mr. Singh was Vice-Chairman of the Implementation Task Force of IOSCO, and played a key role in organizing the IOSCO Annual Conference in Mumbai in Mr. Singh holds a Masters Degree in Systems Science and Automation from the Indian Institute of Science (IISc), Bangalore, and graduated in Electrical and Electronics Engineering from the Indian Institute of Technology (IIT), Kanpur. The Deputy Secretary General s duties include providing strategic advice; implementing aspects of IOSCO s Strategic Direction; managing relations with IOSCO s membership and being responsible for the administrative functioning of the Secretariat. Mr. Amarjeet Singh, Chief General Manager Securities and Exchange Board of India (SEBI) 53

55 Mr. Amarjeet Singh has extensive experience, spanning over two decades, in regulation and supervision of securities markets. Presently, in addition to being the Executive Assistant to Chairman, SEBI, he heads the Office of International Affairs of SEBI. In his earlier stint, Mr. Singh headed the Northern Regional Office of SEBI at New Delhi from 2005 to Mr. Singh is involved in various international regulatory initiatives. Currently, he is the Vice-Chair of the IOSCO Assessment Committee (AC). He has also earlier served as Vice Chairman of the Implementation Task Force (ITF) of IOSCO. The Task Force came out with a comprehensive revision of IOSCO Principles of Securities Regulations and Methodology for assessing the implementation of the said Principles. He has also been closely associated with the recent Financial Sector Assessment (FSAP) of India. Apart from an MBA, Mr. Singh holds a Masters degree in International Affairs (Economic Policy Management) from Columbia University, NY, USA. He is also a recipient of the Rotary Foundation Educational Award, 2000 for promoting leadership development and international understanding by Rotary International, USA. Mrs. Nicoletta, Giusto, Director Head of the International Relations Office, Consob Graduated in Law at the University of Genoa; master in Law & Economics of EU. In 1987 she joined Consob, where she was appointed Head of the International Relations Office in Since 1987, she has attended most of the working parties convened by the EU Commission and the EU Council related to the EU legislation in the securities field as well as ESMA and IOSCO working groups. She represents Consob at the Joint Forum. Mr. Ashishkumar Chauhan, MD & CEO of the BSE Ltd., Asia s first stock exchange Ashish is the MD & CEO of the BSE Ltd., Asia s first stock exchange. He serves on the Board of ICCL, CDSL, BSE Training Institute, BFSI Sector Skill Council and Marketplace Technologies Limited. He is also a member of the Board of Governors of IIIT D&M, Jabalpur and a few SEBI committees. He currently is the Chairman of the Advisory Committee on Technology of FMC, member of several SEBI committees (including PMAC and SMAC) and has 54

56 served on various other government and regulatory committees; CBDT and FMC, among others in the past. He is also a member of the Advisory Board of Lend a Hand India a NGO working in implementing vocational skill development programs for rural and urban youth by providing them practical training at high school level. He is a member of the Capital Markets Committee of FICCI, National Council on Corporate Governance & Regulatory Affairs of CII and Financial Sector Development Council of CII. He has recently been a recipient of the Zee Business award for business transformation. Ashish has over 22 years of experience in Financial Markets and technology. Ashish was part of the 5 member team that set up NSE and set up NSE s equities and derivatives segments and created the NSE Fifty (Nifty) index. He was the Group CIO of the Reliance group and was ranked amongst the top 50 CIOs in the world by several magazines and institutions. He also headed the Corporate Communications for Reliance group in between and was the CEO of Mumbai Indians. Ashish holds a B.Tech in Mechanical Engineering from IIT Bombay and PGDM from IIM Calcutta. Dr. Kusumaningtuti S. Soetiono, Member of the Board of Commissioners Indonesian Financial Service Authority in charge of Financial Education and Consumer Protection Born in London, UK. She holds a law degree from the University of Indonesia, Jakarta in 1979, got her L.LM degree from Washington College of Law, The American University USA in 1984 and obtained her Doctorate of Law at the University of Indonesia, Jakarta in She began her career as a staff in the Credit Planning and Supervision Department of Bank Indonesia in In 2001, she was appointed as Acting Director of the Legal Directorate then as, Director of the Directorate of the Foreign Affairs Bank Indonesia in 2003, and Director of the Centre of Central Banking Research and Studies Bank Indonesia in In 2007, Kusumaningtuti S. Soetiono served as a Director of the Directorate of Human Resources Bank Indonesia and in 2010 she was given the mandate as a Head of Representative Office of Bank Indonesia New York until On July 18, 2012 she was appointed as a Member of the Board of Commissioners OJK in charge of Financial Education and Consumer Protection based on Presidential Decree No. 67/P year 2012 and inaugurated on July 20, 2012 by the Chief Justice of the Indonesian Supreme Court for the term of

57 Mr. Ranjeet S Mudholkar, CFP, FPSB India Mr. Ranjeet S. Mudholkar is currently serving as the Vice Chairman and CEO of Financial Planning Standards Board India (FPSB India). In the past ten years, he has led the transformation of FPSB India, from its early inception as Association of Financial Planners in 2002 till date. During this period, he has also served as the Chairman of the Asia Pacific Forum, comprising Financial Planning Standards Board Ltd. (FPSB) Affiliates for the year 2009 during meetings held in Dublin, Singapore, and Tokyo. Mr. Mudholkar has also served as a member of the Nomination Committee to select and nominate the Board Members of FPSB, US for the year Besides ensuring that the vision and goals of successive Boards are well executed, he has been responsible to ensure the growth of the organization while keeping all the stakeholders aligned. He has been the spokesperson of the organization and the Editor of the Financial Planning Journal, a leading monthly periodical for the Financial Planning community in India. During his career, he has gathered experience across various disciplines, from education, financial planning, human resources, mutual funds and research. A graduate in statistics and computer programming with post graduation in management, Ranjeet has been called Mr. Turnaround by the Times of India, and has featured under Smart People by Business Standard, and Front Runner by Business India. Apart from being on various TV shows as an expert in financial planning, he also gives lectures to senior officials of various organizations. Mr. Moritz Beker, Senior Policy Officer, Section INT 4 International Policy/Affairs Securities Supervision BaFin Mr. Moritz Beker joined the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) in 2006 and initially worked in the day-to-day supervision of investment firms. In 2011, he was seconded to the Ministry of Finance in Berlin, where he worked in the department responsible for stock markets and securities. Since his return to the BaFin Mr. Beker is a member of the Department "International cooperation and representation of the BaFin in the area of 56

58 securities law". Currently his main focus and interest lies with the ongoing legislative process to revise the European Directive on Markets in Financial Instruments Directive (MiFID). Mr. Stephen Po, Senior Director, Intermediaries Supervision Department, Securities & Futures Commission, Hong Kong Mr Po is currently the Senior Director and head of the SFC s Intermediaries Supervision Department. In this role, Mr Po has primary responsibility for supervising intermediaries in the securities and futures sector to embrace high standards of conduct and integrity. The SFC supervises over 1,900 financial intermediaries in Hong Kong including securities dealers, futures brokers, financial planners and hedge fund managers. Mr Po oversees key supervision activities such as carrying out on-site inspections of firms for the purpose of identifying and managing risky firms and detecting misconduct. He has also been actively involved in the formulation and implementation of anti-money laundering measures for the securities and futures industry. Mr Po is also the Chairman of the International Organisation of Securities Commissions ( IOSCO ) Committee 3 on the Regulation of Market Intermediaries. The C3 is part of IOSCO s standard setting body that is responsible for reviewing and proposing standards on the regulation of market intermediaries in a cross border environment. The C3 currently comprises of members from 28 regulatory authorities around the world. Mr Po is a qualified accountant and holds a MBA and BBA degree. Mr. Yasuto Watanabe, Director of International Financial Markets and International Accounting, Financial Services Agency, Japan Mr. Yasuto Watanabe is appointed as the Director of International Financial Markets and International Accounting (Financial Services Agency, Japan). Mr. Watanabe also served as the Director for Global Environment Bureau under the Ministry of the Environment (Japan). Further, Mr. Watanabe has also served as an Economist, followed 57

59 by Deputy Director for the Ministry of Finance (Japan). A Master s graduate in International and Development Economics from Yale University, Mr. Watanabe has also worked with prestigious institutions holding seniors roles such as a Board member for Asian Development Bank and a Senior Counsellor for Inter-American Development Bank. Mr. Robert Elsen, Financial Counsellor, German Embassy Beijing, China Mr. Elsen is a representative of the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht BaFin) at the Germany Embassy in Beijing China. Prior to his secondment to the German Embassy, Mr. Elsen was the Deputy Head of Section INT 1 (International Policy Technical cooperation). He also worked in the prospectus section of the BaFin and was engaged in the drafting work of the prospectus directive as well as its implementation into national law. He participated in the CESR group prospectus on the European level (until 2006) as well as the IOSCO subcommittee on Disclosure (until 2009) and was at the time the deputy head of the Section Pro 1. Mr. Elsen studied law in Germany and gained working experience at the UNOV in Vienna, UNON in Nairobi and at the German Embassy in South Africa prior to working for BaFin. He was until 2012, when he moved to China, a guest lecturer at the University of Applied Sciences in Mainz and has written various articles and publications. Prof. Dr. Günter Hirsch Günter Erhard Hirsch is Honorary Professor at the University of Saarbrucken, Germany. Mr. Hirsch was President of the German Federal Supreme Court of Justice ( ) and is lead author of various publications in European and German law. Before that he has served for several years as judge at the Court of Justice of the European Union, he was president of the Constitutional Court of the Free State of Saxony, president of the Higher 58

60 Regional Court Dresden, president of the District Court Dresden. Before taking up his positions as court president, he was head of the division Legislative Planning, Constitutional Law, European Law at the Bavarian State Ministry of Justice. He was educated in Germany, Great Britain, the USA and at the Diplomatic Academy of Vienna. He holds a PhD from the University of Erlangen, Germany. Mrs. Zia Mody ZIA MODY is the Founder and Senior Partner of AZB & Partners and one of India s foremost corporate attorneys. She passed her law degree from the University of Cambridge in 1978 and was enrolled as an Advocate with the Bar Council of Maharashtra & Goa in She did her LLM from Harvard Law School and was then admitted as a member of the New York State Bar by examination in Zia worked as a corporate associate at Baker & McKenzie, New York, for five years before moving to India to set up practice, establishing the Chambers of Zia Mody in 1984, which then became AZB & Partners in The Firm has offices in Mumbai, Delhi, Bangalore, Pune and Chennai with an integrated team of approximately 250 legal professionals. Zia s abilities are recognized globally, as is reflected in her appointment as a non-executive director of the HSBC Asia Pacific Board, a member of the World Bank Administrative Tribunal, Washington D.C. ( ), and a Vice President and Member of the London Court of International Arbitration ( ). Zia serves on various advisory committees of the Confederation of Indian Industry including its National Council and its committees on Corporate Governance, Financial Services, Capital Markets, Legal Services and Retail and a member of the Godrej Committee on Corporate Governance recently constituted by the Ministry of Corporate Affairs. Listed by Forbes Asia as one of Asia s 50 Power Businesswomen (2012), Zia is the recipient of numerous awards and has been awarded the Business Woman of the Year, 2010 award by the Economic Times, for which she was felicitated by The Society of Indian Law Firms (SILF) as the Law Leader The Economic Times voted her one of the country s most powerful CEOs (2004 to 2012), and one of the 15 most powerful Indian women leaders in 2010 to She has also been selected as one of the 25 most powerful women in business by Business Today in 2004 to AsiaLaw Profile hailed her as one of The Leading Lawyers - India in the fields of Mergers & Acquisitions, General Corporate Practice, Dispute Resolution, Corporate Governance and Capital Markets & Corporate Finance for 2010 and 2011, while Asia Pacific Legal 500 and Chambers Global, have identified her as a leading individual in the Corporate Mergers & Acquisition, Private Funds, Private Equity, Litigation and Infrastructure Sectors.. Zia has recently received the Legal Icon of the Decade 2013 award at the Legal Era Awards. 59

61 Mr. P. K. Bindlish Mr. P. K. Bindlish is the Chief General Manager, Securities & Exchange Board of India (SEBI), India & is presently heading the Market Regulation Department dealing with Stock Exchanges, Depositories, Clearing Corporations, market policies & monitoring thereof. Mr. Bindlish is a Rank Holder Chartered Accountant from Institute of Chartered Accountants of India. Mr. Bindlish has rich experience of more than 30 years in the field of finance & capital market..since 1993 he is working with SEBI. During his association with SEBI he has carried out various functions such as policy formulation, investigation, adjudication etc. Mr. Bindlish has been associated with various committees constituted by SEBI, Reserve Bank of India (RBI), Ministry of Corporate Affairs (MCA), Institute of Chartered Accountant of India, and Institute of Company Secretaries of India.etc. Mr. Bindlish had been the member of N R Narayanmoorthy Committee on Corporate Governance, Kumar Manglam Birla Committee on Corporate Governance, J R Varma Committee of Carry Forward Mechanism, Committee on Uniform Bye Laws, Committee on Delisting of Securities, Risk Management Committee, Payment & Settlement Committee of RBI, Secretarial Standard Board of ICSI, and Financial Reporting Review Board of ICAI etc. Mr. Bindlish has also been associated with various other committees such as Justice Kania Committee on Demutualization & Corporatisation of Stock Exchanges, Accounting Standards Committee, Derivative Committee, Dematerialization Committee, Secondary Market Advisory Committee etc. Mr. Bindlish has been associated with major changes in capital market in India such as on line trading, dematerialization of securities, rolling settlement, derivatives, robust risk management system, corporate governance, demutualization of stock exchanges etc. He has also handled several sensitive investigations. He has passed several Adjudicating Orders establishing jurisprudence in the Capital Market. 60

62 Mr. Bui Hoang Hai, Deputy Director of Securities Issuance Department, State Securities Commission of Vietnam (SSC) Bui Hoang Hai has worked for SSC since From June 2008 to present, as the Deputy Director of Securities Issuance Department of SSC, Mr. Hai has been responsible for overseeing IPOs of public companies, promoting good corporate governance practices in listed companies and drafting guidelines for securities listing and offering of Vietnam companies in overseas markets. Mr. Hai has a bachelor degree in economics from the Hanoi Foreign Trade University and a master degree from the National University of Singapore. Mr. R. Sundararaman, Chief, Business Excellence and New Products at National Stock Exchange of India (NSE) R. Sundararaman, Chief, Business Excellence and New Products at National Stock Exchange of India (NSE) is certified Financial Risk Manager by Global Association of Risk Professionals, New York. He is also an Associate member of Institute of Cost & Work Accountants of India and a Certified Associate of Indian Institute of Bankers. He has a long experience of around 30 years in the area of finance. At NSE he is working for the past 19 years. He has handled various portfolios at NSE. Presently he is heading the New Products, Business Excellence operations, Index related services and data and info-vending products. 61

63 Mr. Somasekhar Sundaresan, Partner, J Sagar Associates Somasekhar Sundaresan heads the securities law and financial sector regulatory practice at JSA, a national Indian law firm. He has been in practice for the past 14 years. In addition to a commercial transactional practice in the area of securities laws and M&A of listed companies, he also acts as counsel before the Securities and Exchange Board of India, the Securities Appellate Tribunal and the Supreme Court in connection with securities regulatory litigation. Somasekhar has also been actively involved in regulatory policy and legislative drafting. He was a member of the Working Group on Foreign Investment in India under the chairmanship of Mr. U.K. Sinha, which submitted its report in July He was a member of the Securities and Exchange Board of India s Takeover Regulations Advisory Committee, and drafted Takeover Regulations, which has been substantially implemented. He was a consultant to the Financial Sector Legislative Reform Commission, which submitted its report in 2013, containing the draft Indian Financial Code, which contains new financial sector legislation for India. He is currently a member of a committee of the Securities and Exchange Board of India that is drafting regulations governing insider trading in India. He is a permanent invitee to a committee that is writing a new policy for issuance of global depository receipts and foreign currency convertible bonds. Somasekhar authors a fortnightly column titled Without Contempt on investment law and policy in the Business Standard, a national business newspaper in India. He is an active member of FICCI s Steering Committee and its Capital Markets Committee, as also a member of the CII s Economic Policy Council. He is an independent director on the Board of Oxfam India, a rights-based NGO. 62

64 Mr. Michael Zollweg, Head of Trading Surveillance Office (TSO) Frankfurt Stock Exchange & Eurex Deutschland Mr. Michael Zollweg is the Director and Head of Department of the Trading Surveillance Office (TSO) of Eurex Deutschland and the Frankfurt Stock Exchange. Before joining Deutsche Börse AG in 2000 he worked in the Legal & Compliance Department at Salomon Brothers and Barclays Bank in London, Frankfurt and Milan. Mr. Zollweg studied law at the University of Frankfurt and is a certified (CCI) bank clerk and certified Exchange Trader. Mr. Carl-Frederik Scharffenorth, Senior Trading Surveillance Analyst, Trading Surveillance Office (TSO) Frankfurt Stock Exchange & Eurex Deutschland Mr. Carl-Frederik Scharffenorth is an Expert Analyst of the Trading Surveillance Office (TSO) of the Frankfurt Stock Exchange. He is chair of the Surveillance Subgroup Practices Inter-market Surveillance Group (isgportal.com). Prior to joining Deutsche Börse AG in 1999 he worked at the Commodity Futures Exchange, Hannover. Mr. Scharffenorth studied economics at the University of Bonn/Amsterdam and he is a certified exchange trader. Mr. Maruyama, Director of Market Oversight Intelligence, Securities and Exchange Surveillance Commission, Japan 63

65 Mr. Maruyama joined the Securities and Exchange Surveillance Commission (SESC) in 2012 and has made use of his long years of experience in securities industry to oversight the market. He began to build his career at the Tokyo Stock Exchange in the middle of 1980s and experienced various business functions of stock exchange such as market oversight, planning of market services, listing examination, IT planning, corporate publication and so on. He was seconded to the Accounting Standard Board of Japan (ASBJ) from 2007 to 2009, where he engaged with developing accounting standards and coordinating with other countries standard setters. His main focus at SESC lies with intelligence analysis of market trend, news, information and so on. Dr. V.R. Narasimhan is a post graduate in Commerce, MBA (Finance), Ph D and member of Institute of Company Secretaries of India. He has about 35 years of work experience and about 30 years of experience in financial and capital markets in India. At present he is working in National Stock Exchange of India Limited as Chief-Regulations. He worked in securities market regulator in India (SEBI). He was a part of the core group that has set up the first securities depository in India. As a member of the Institute of Company Secretaries of India, he has been a part of several academic initiatives of the Institute including being on the Secretarial Standards Board and Capital Markets Committee. 64