Financial sector watchdogs meet to discuss inter-regulatory issues

New Delhi: Financial sector watchdogs met on Monday to deliberate on inter-regulatory issues for the first time after the government assured that their autonomy would not be curbed by a recent Bill passed in Parliament, reports PTI.

The meeting of the High Level Coordination Committee of Financial Markets (HLCCFM) was chaired by Reserve Bank of India (RBI) governor D Subbarao and attended by all financial sector regulators, besides finance ministry officials.

"The HLCCFM reviewed the developments in the financial markets and deliberated on... inter-regulatory matters," an RBI release said here.

Earlier this month, the Lok Sabha had passed a Bill to replace the Unit Linked Insurance Plans (ULIP) Ordinance. The Securities and Insurance Laws (Amendment) and Validation Bill, 2010, provides for setting up a joint body under the chairmanship of the finance minister and with representation from the four financial sector regulators and the finance ministry.

The Bill states that the RBI governor will be the vice-chairman of the joint committee. However, apprehensions were expressed by the RBI over its autonomy being curbed.

Allaying these fears, finance minister Pranab Mukherjee had told the Lok Sabha, "It was true there were lots of apprehensions whether we are going to dilute the regulators' independence or autonomy. It will only be in the case of jurisdiction disputes between the regulators that the joint mechanism will be used."

Mr Mukherjee further assured that the joint mechanism will not deal with other areas and only the regulators can refer the matter of jurisdiction to the committee.

The government issued the ULIP Ordinance on 18th June after capital markets regulator Securities and Exchange Board of India (SEBI) and Insurance Regulatory and Development Authority (IRDA) locked horns over regulation of Unit Linked Insurance Plans (ULIPs) and could not seek a joint legal mandate to sort out the issue, as suggested by the finance ministry.

The HLCCFM reviewed the developments in the financial markets and deliberated on, among others, issues relating to the development of corporate bonds, the RBI statement said.

In addition, the trade reporting system for securitised instruments and issues related to credit default swaps (CDS) were also discussed at the meeting, it said.

The meeting was attended by finance secretary Ashok Chawla, Department of Financial Services secretary R Gopalan and chief economic advisor Kaushik Basu.

Among the regulators present at the meeting were SEBI chairman C B Bhave, IRDA chairman J Hari Narayan and Yogesh Agarwal, chairman of the Pension Fund Regulatory and Development Authority (PFRDA).

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