System in place to handle market moves: Sebi

Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets BSE | NSE 09/02/12

With the huge sell-off across global markets, Indian markets should expect a fall this morning.

Sebi Chairman, M Damodaran mentions that the systems are fully in place to handle market moves and will remain strong. He further adds that one cannot attribute market moves to one regulatory action.

Excerpts of CNBC-TV18's exclusive interview with M Damodaran:

Q: It is a bad morning for global markets, are all systems out here with the exchanges in place to handle any such big sell off in India?

A: The Indian market has demonstrated more than once that should there be difficult moves in the market, the systems are fully in place and will remain in place.

Q: What did you make as a regulator about what the Chinese regulators had to say about their market operations yesterday?

A: I don't comment on what other regulators do or how markets respond to regulatory moves. All that I can say in the context of the Indian market is that since regulation is a consultative process with regulated universe, its reactions are certainly on predictable lines.

Q: Could walk us through how exactly things will move if indeed the market has a deep cut and might even get us close to a circuit down, how will the situation pan out?

A: As I said, I don't talk on the direction of the movement of the market or the extent of the movement of the market. There are other people to do so. All I can tell you is that in the Indian market, over the last few years, we have put in place systems to address developments that take place intraday in the market, should there be significant moves in the market.

It was first demonstrated on May 17, 2004 and then again last year that if market moves significantly in one direction systems are in place and have been seen to be in place and therefore those that are in the market should draw a lot of comfort from that.

Q: Have you asked stock exchanges to peruse any other investigation along the lines of Atlanta which spooked the market 2-3 days back?

A: I don't know whether the movement in the markets is attribuatable to one particular order that might have been passed in respect of one investigation. There are a number of things that move markets one way or the other. Regulation is a continuing process and those irregularities that come to notice will be probed and will be acted on because at the end of the day, we need to see that people in the market that want to play by the rules are enabled to play by the rules.

Q: Even so, there has been a flood of primary paper hitting the market, is the process underway in terms of checks and balances for other primary paper that might have hit the market and moved in a similar fashion?

A: We have seen a lot of new issues coming to the market. I think what you have seen is that on the day of listing, because we do not have circuit breaker in place, you have seen some stocks move up several times the price at which they were issued and that is something that we are looking to see what correctives we can bring to bear.

Because on day one, we don't have in place checks in order to ensure price discovery now, is that giving rise to a problem and if so, what should be done in a consultative manner with inputs from our advisory committee. We will certainly address that matter.