Citizens' Issues
Jharkhand to appoint nodal officer for ease of business

The state government has decided to appoint nodal officer to interact with the investors willing to invest

 

Jharkhand will appoint a nodal officer to communicate with entrepreneurs willing to set up industries in the state, an official said on Thursday.
 
"The state government has decided to appoint nodal officer to interact with the investors willing to invest. The decision has been taken under policy of the state government of ease of doing business," an official of Jharkhand industry department told IANS.
 
The official also spoke on the investors' complaint that "the state government does not act as facilitation agency to create business environment in the state".
 
"The state government has taken a slew of measures in the field of labour, land and other sectors to help the investors. The government has launched a single window portal to help the investors," the official said.
 
"Eleven companies have shown willingness to invest Rs670 crore in food processing sector," the official said, adding: "Jharkhand is known for minerals like iron ore, coal and others but there is huge is potential in food processing sector. The government is trying to lure the investors to set up food processing units."
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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WPI deflation is bottoming out, says Nomura
WPI (Wholesale price index) deflation eased to -4.5% year-on-year (y-o-y) in September 2015 from -4.9% in August 2015, marginally lower than expectations (Please see Figure 1). WPI food price inflation rose to 0.2% y-o-y from -1.5% in August 2015, with faster inflation momentum in the pulses (38.6% y-o-y) and spices (11.8% y-o-y) categories. These observations have been made in a Nomura research note.
 
Fuel price deflation deepened to a record low of -17.7% y-o-y owing to a broad-based decline across all fuel categories (excluding electricity). Meanwhile, the core WPI (WPI manufactured ex-food) contracted -1.9% y-o-y, unchanged from August 2015.
 
Much of the WPI deflation continues to reflect lower y-o-y global commodity prices, rather than weaker domestic pricing power, points out Nomura.  A breakdown of the WPI into commodity and ex-commodity prices shows that while WPI commodity prices contracted -16.1% y-o-y, WPI-ex commodity prices actually rose 0.7% y-o-y in September (Please see Figure 2).
 
Even though input costs are lower, firms have broadly held their output prices stable, suggesting ongoing margin expansion, observe Nomura analysts in the research note (Please see Figure 3).
In their inflation analysis, Nomura analysts observe that underlying trends suggest that WPI deflation is bottoming out. Indeed, even though y-o-y WPI readings remain negative, food and manufactured product prices (metals, cement) rose sequentially in September 2015. Nomura expects WPI inflation to remain negative until end-2015, but as base effects wane, it should turn positive from Q1 2016 onwards. Nomura expects WPI deflation to cease, but price pressures are expected to stay subdued.
 
 

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High Frequency Worries over HFT
High-frequency trading is causing more and more concern, especially among global regulators
 
High frequency trading (HFT), through computer-generated algorithms, is something that few retail investors are even aware about, despite its massive role in our equity markets. According to a discussion paper of the Securities & Exchange Board of India (SEBI) in 2013, HFT accounted for a massive 94% of all trades in the equity derivative segment in a single month—February 2013—on the largest exchange. Stock exchange sources say that the percentage is probably higher today across the two national exchanges. HFT is automated trading conducted at microsecond speeds throughout the trading day. Large traders execute this by renting space to locate their servers within the stock exchange premises in order to get the benefit of faster transaction speeds. What are the implications of such trading?
 
According to a briefing note of the senior supervisory group (SSG) of global market regulators, put out in April 2015, “The risk that HFT activity specifically, and algorithmic trading more generally, poses to firms and the financial markets has sparked debate and raised concern among market participants and regulatory agencies globally.” The SSG comprises market supervision agencies from 10 countries and the European Union. 
 
The concerns expressed by the group are: 
  1. Systemic risk is amplified and an error with an algorithm, at a relatively small firm, could cascade throughout the market. 
  2. Technology failures, exceptional or unanticipated market conditions could lead to a firm carrying significantly more risk overnight than it had intended, and without timely oversight. 
  3. Internal controls may not have kept pace with market complexity. More specifically, the note says, “malfunctions and outages at financial institutions and critical entities such as exchanges are not new, but their potential impact can be amplified.” 
  4. Losses can accumulate rapidly in the absence of adequate controls. The SSG note cites examples such as the “2010 Flash Crash (a large-order execution algorithm operating in an unexpected way), the 2012 Facebook IPO (an exchange system problem), and the 2012 Knight Capital incident (the malfunction of an order routing system).” The note says that regulatory action that followed these incidents “highlighted control shortcomings related to insufficient testing and new rules.” 
Apart from international regulatory concerns and greater scrutiny of HFT trading, faster access to some traders has become a matter of litigation. According to a report in The New York Times, a group of large pension funds has filed a suit alleging that stock exchanges favour high-frequency traders at the expense of other investors. The pension funds allege that exchanges offer a number of paid services used by high-frequency traders, including detailed data feeds, special types of orders and the ability to place computer servers in the exchanges’ data centres. Thus, the exchanges have a “financial incentive to create an uneven playing field.” 
 
In India, the first reporting requirement on SEBI’s new guidelines for HFT trading with additional checks & balances was issued in May 2015. These reports are due for the September quarter. While HFT was earlier available only to large traders who could pay hefty costs, fees and rent in the region of Rs40 lakh per annum, media reports suggest that it will be extended to smaller brokers with shared server space. Does this mean that SEBI has found an answer to all the issues that are of concern to global regulators? We don’t know; because the market watchdog gets away with generalised threats or instructions but remains unaccountable when it comes to specifics. 

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COMMENTS

Chandragupta Acharya

1 year ago

I am glad that Moneylife has taken up this issue. HFT is one of those western evils that has been blindly copy-pasted into India for the benefits of select vested interests. It needs to be banned entirely.

Sucheta Dalal

1 year ago

Whistleblowers would be more valuable if they were in touch ...
Watching from a distance, jumping to conclusions about "self-imposed gags" and remaining silent when writers to battle is disappointing!!

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