FM eyes on market reforms

The finance ministry has proposed a mechanism under which the equity option can be traded separately and it is expected to be implemented by September this year. This proposal is a market friendly measure from the finance ministry. Definitely this is going to be a favourable for the market and traders. Market players have mixed reaction over the finance minister's proposal. Some feel this will enable a portion of the debenture to be separately traded, even at a discount and address the need of different classes of investors.

The ministry has asked capital market regulator - SEBI to implement this measure, whihc was first announced by Finance Minister P Chidambaram in Budget 2008-09 as part of efforts to expand the domestic market for corporate bonds. According to media reports, the ministry is also planning to ease the norms governing the pricing formula for American Depository Receipts (ADRs) and Global Depository Receipts(GDRs). At present, the ADR/GDR issue price is determined on the basis of the higher of the last six month's average price or the last 15 days average price prior to the issue. The proposal is to reduce it to two months' average price.