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SEBI nods to Internet trading of shares of Indian companies

The Securities and Exchange Board of India today gave a green signal to Internet trading and approved in toto the final report of the Kumaramangalam Birla Committee on Corporate Governance.

The controversy relating to financial institutions' nominees on the company's board has been resolved by the Kumaramangalam Birla Committee report.

Besides, new norms were introduced to encourage venture capital for start-ups in the country by SEBI at its board meeting.

The market regulator decided that the Internet trading could take place under the existing legal framework through use of order-routing systems. Orders from clients were routed through Internet to brokers for trade execution on registered stock exchanges, SEBI chairman D R Mehta said today in Bombay.

While passage of the cyber law (the Infotech Bill) will certainly make the system stronger, the Net trading can be implemented under the existing laws, he said.

The broker will own the complete responsibility for the trades, he added. Existing norms relating to margin system will be applicable in this type of trading, he added.

When asked when the Net trading will be implemented, Mehta said from SEBI's side it can be carried out any time from now.

However, bourses will have to make their systems ready for the change. While the National Stock Exchange is ready to implement as it has opened up its software front-end to allow other software vendors to provide inter-connectivity with brokers' systems, the Bombay Stock Exchange will be prepared for it by mid-March 2000, he added.

He claimed that trade volumes will increase manifold once the system is put in place.

R C Murthy's column: Online trading is good news for retail investors

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