5 th IIEF Securities Industry Summit , 2001
22-23 June 2001, World Trade Centre, Mumbai

On 11 May 2001, the Joint Committee of the RBI and SEBI announced a set of revised guidelines governing "bank financing of equities and investments in shares". These guidelines may be broadly summarized as follows:

a. Loans against equities are capped at 5% of the overall exposure of all banks, except for loans against shares where the borrower utilizes the loan for purposes unrelated to the stock market.
b. Minimum standards for diversification amongst borrowing firms should apply
c. Loans against shares should have a collateral
d. Banks are forbidden from engaging in arbitrage or lending to firms which do arbitrage
e. Banks are required to do marking to market of collateral every week, and daily marking to market is recommended.

On 14 May 2001, the SEBI Board agreed on a number of new principles for operations of the equity market including:

a. The major 200 stocks of the country will switch to rolling settlement on July 2, 2001
b. Trading will use pure rolling settlement, without deferral mechanisms such as badla, and existing positions on badla will be fully unwound on September 3, 2001
c. Trading in options on individual stocks will commence for some stock
d. All stocks will trade with pure rolling settlement from January 2, 2002
e. The existing system of price limits for individual stocks will be removed. It will be replaced by a system of trading halts that are triggered by movements of the index

These policy announcements have generated a certain degree of concern and uncertainty among securities market participants and investors with regard to a number of business strategy, adoption and operational issues including institutional capabilities for high-speed funds movement for rolling settlement in T+5, margin trading; back office processes, IT systems and capabilities; stocklending mechanisms; credit facilities for brokerages; operations and skills for using index and stock derivatives; client interface, client credit risk management and support.

Invest India Economic Foundation (IIEF) is conducting its 6th Annual Securities Industry Summit against this backdrop. This year's conference aims to facilitate a better understanding of the impact of the new policy initiatives and the steps that the brokerage industry, stock exchanges and banks need to take to gear up for the emerging business environment. The conference is broken into 9 technical sessions with one speaker and two commentators per session discussing their perspectives and ideas regarding the various questions that the markets face beyond 2 July.