SEBI willing to change norms on ETFs: Sinha- Business News

SEBI willing to change norms on ETFs

  • October 27, 2015  
  • |  
  • UPDATED   10:08 IST

In an event organized by the National Stock Exchange (NSE), market regulator chief UK Sinha while speaking about exchange-traded funds (ETFs), noted that SEBI is open to changing the norms governing ETFs, if required, on the basis of constructive inputs from market players.

The domestic ETF market which is roughly around Rs 9,000 crore, has been a beneficiary of recent decisions by the Government of India.

For its recent disinvestments in state-owned firms, the Government had opted for the ETF route. Other than this, EPFO (Employees' Provident Fund Organization), IRDA (Insurance Regulatory and Development Authority) and PFRDA (Pension Fund Regulatory and Development Authority) have been given the nod to take exposure to capital market via the ETF route.

Sinha was speaking at 'India ETF Conference 2015' conference organised by NSE, in Mumbai.

Commenting about the product, Sinha said, "An ETF is almost like a mutual funds with a secondary market. The market has grown 12 times in last 12 years in India. A stage has come when along with Employee Provident Funds others funds can look at ETF too. The big plus for ETF is the cost of trading".

He also pitched for more transparency and disclosures, as a means to avoid any possible risks. "There is a very good chance of the product being popular among the masses if we are able to communicate properly," he added.

One of the potential red flags about the product that he raised was liquidity concern. "There could also be situation that underlying is not liquid but the ETF is liquid. Such a case should be avoided."

Currently in the Indian market, Nifty ETF is the oldest and the most popular, commanding 97% market share in AUM of equity based ETF.