Next year will be challenging for IT companies: TCS

“Agility is going to be a very important for the sector. Every passing year is more challenging than the coming year and most (companies) think to turn these challenges into opportunities,” TCS executive director and CFO S Mahalingam said

Mumbai: The depreciation in rupee’s value is likely to benefit software exporters, but the global macro economic situation will pose a challenge for the industry next year, reports PTI quoting a top official of IT giant TCS.

“This year has gone very well and better than what we expected. Next year it will be some kind of stressful environment and every government will try to avoid the Lehman kind of situation,” Tata Consultancy Services executive director and CFO S Mahalingam told reporters on the sidelines of a CII event here.

The rupee movement has been very volatile and in the long-term, this depreciation is likely to benefit the IT industry (largely dependent on the US market) as a whole, he said.

“The rupee movement has been going like a ‘yoyo’.

It’s a roller coaster ride. For longer term it might be good for my kind of industry.” 

This quarter (Oct-Dec) TCS hedged the rupee at 46.5 per dollar and next quarter it will be 47.5, but after that it is open, he said.

The global macro economic situation has been the major concern for the industry and it will continue to remain a challenge next year, he said.

“Agility is going to be a very important for the sector. Every passing year is more challenging than the coming year and most (companies) think to turn these challenges into opportunities,” he added.

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ADAG denies charge as report says Pleuri for Ambani funds

In a statement issued from New Delhi, the Anil Dhirubhai Ambani Group said that no charges have been levelled against them by the UK regulators in these proceedings. The group also said that the five-year-old matter relates to a regulatory action in the UK against a foreign bank’s former employees for misuse of client accounts and unauthorised trades made by them

London: Two UBS bankers here unsuccessfully tried to create an offshore investment entity allegedly to enable industrialist Anil Ambani route his funds back into Indian stock market, said a media report quoting proceedings at a financial market tribunal here.

In a statement issued from New Delhi, the Anil Dhirubhai Ambani Group (ADAG), however, said that no charges have been levelled against them by the UK regulators in these proceedings.

The group also said that the five-year-old matter relates to a regulatory action in the UK against a foreign bank’s former employees for misuse of client accounts and unauthorised trades made by them.

British daily Financial Times has reported that “two UBS bankers tried to create an offshore vehicle through which one of India’s most powerful businessmen could illegally invest in securities at home, according to evidence heard in a London tribunal.”

“Anil Ambani, whom bank executives described as a ‘mega-client’, was the ultimate owner behind a Mauritius-based vehicle called Pleuri, the tribunal heard,” the report said, while noting that Indian nationals and companies are not permitted to invest in Indian securities through foreign institutional investors.

“Pleuri was established with the specific objective of investing in Indian stocks, according to evidence presented by the UK’s financial regulator in a case against the former head of UBS’ London-based India desk,” the report added.

Reacting to the report, a Reliance Group spokesperson said that “the matter relates to regulatory action in the UK against former employees of a foreign bank, for unauthorised trades made by them and misuse of a large number of client accounts.

“The bank has already accepted the weaknesses in its internal systems and processes, and settled the matter with the UK regulators by payment of a fine.”

"There are no charges levelled against us by the UK regulators in these proceedings. As such, we are not party to these proceedings, and not represented therein,” he added.

The spokesperson said that “the matter is nearly five years old, and has already been closed with Indian regulators under the consent order framework in January 2011.”

He said that all the aspects reported by the media “including the ownership and/or beneficial status of certain entities investing in India, were considered by the Indian regulators, while passing the consent order in January 2011.”

The Financial Times report said that the “details of the controversial structure have emerged in the case of Sachin Karpe, former head of the desk that managed Indian client portfolios at UBS’ wealth management division in London.

Mr Karpe is challenging a 1.25 million British pound fine from the Financial Services Authority (FSA), it added.

Mr Karpe and the other UBS banker are no longer working with the Swiss bank and they had “allegedly misled UBS’ compliance team by maintaining that Pleuri was owned by a wealthy French couple.”

“UBS ultimately refused to sanction the structure,” it said.

The report said that FSA has told the tribunal that the “source of funds was plainly the Ambani family”, while it quoted a counsel for Mr Karpe as saying that Mr Ambani had “asked for a transaction and Sachin Karpe enabled it.”

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SEBI prohibits sub-contracting of core biz by intermediaries

As per the guidelines announced on Thursday, intermediaries like brokers and depository participants “desirous of outsourcing their activities shall not outsource their core business activities and compliance functions”

Mumbai: Capital market regulator Securities and Exchange of India (SEBI) on Thursday released guidelines on outsourcing by intermediaries like brokers and depository participants that prohibit sub-contracting of core business activities, reports PTI.

The guidelines also direct them to put in place a comprehensive policy on the outsourcing of activities.

“An intermediary seeking to outsource activities shall have in place a comprehensive policy to guide the assessment of whether and how those activities can be appropriately outsourced,” SEBI said in a circular.

The board or partners of the intermediary will have the responsibility for the outsourcing policy and overall responsibility for related activities undertaken under it, SEBI said.

The principles for outsourcing by intermediaries have been framed based on views given by various intermediaries, stock exchanges and depositories, it added.

“The intermediaries desirous of outsourcing their activities shall not outsource their core business activities and compliance functions,” SEBI said.

Such functions include activities like execution of orders and monitoring of trading activities of clients in case of stock brokers, dematerialisation of securities in case of depository participants and investment related activities in case of mutual funds and portfolio managers.

SEBI said the intermediaries shall be responsible for reporting of any suspicious transactions to Financial Intelligence Unit or any other competent authority in respect of activities carried out by the third parties.

“In view of the changing business activities and complexities of various financial products, intermediaries shall conduct a self assessment of their existing outsourcing arrangements within a time bound plan, not later than six months from the date of issuance of this circular and bring them in line with the requirements of the guidelines/ principles,” it said.

Regarding the principles for outsourcing, the regulator directed the intermediaries to establish a comprehensive outsourcing risk management programme to address outsourced activities and the relationship with the third party.

“The intermediary shall ensure that outsourcing arrangements neither diminish its ability to fulfil its obligations to customers and regulators, nor impede effective supervision by the regulators,” SEBI said and also asked them to conduct due diligence while selecting the third party.

All relationship between market intermediaries and the outsourcing partners have to have written contracts describing the material aspects of the arrangement.

“The intermediary and its third parties shall establish and maintain contingency plans, including a plan for disaster recovery and periodic testing of backup facilities,” SEBI directed and added that intermediaries should also ensure that the outsourcing firm protect confidential information.

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