Sebi asked to beef up supervision

The International Organisation of Securities Commissions (IOSCO) on Monday asked the domestic market regulator, Securities and Exchange Board of India(Sebi) to further strengthen its supervision of various market entities including fund managers.

In its detailed assessment report on Indian securities markets, IOSCO appreciated the 'well developed' regime of regulatory and supervisory regime of Sebi though. 

At the same time, IOSCO suggested that Sebi strengthen the stress-testing procedures of the central counterparties (CCPs) and to remove the liquidity risk management.

Releasing the IOSCO report, Sebi said it has initiated the process to strengthen the stress testing procedures of CCPs. Sebi also said that it is carrying out theme based inspection of various market intermediaries, mutual funds, depositories and stock exchanges among others.

The comprehensive guidelines for registration and supervision of mutual funds has been issued by the Indian regulator by way of Sebi (Mutual Fund) Regulations, 1996. The supervision system of mutual funds is a two-tier system, i.e., supervision by trustees on one hand and Sebi on the other hand.

Mutual funds are required to periodically report their activities to Sebi and a risk-based approach is followed for periodic inspections.