BANGALORE, May 31: The Securities and Exchange Board of India (SEBI) will SOON constitute a panel to sort out various discrepancies regarding the service tax levied on brokers.Disclosing this, senior SEBI executive director OP Gehrotra said that the panel will have representation from the broking community.

The broking community particularly the members of the Bangalore Stock Exchange (BgSE) had made representations in this regard to the regulator that the charges levied were exorbitant.Addressing an impromptu gathering of BgSE brokers here on Friday, Gehrotra said that the bad delivery problems plaguing the bourses will soon be a thing of the past once the Chandrasekharan panel report is formally adopted.Admitting that there has been too much regulation, Gehrotra said that the safety of investors must be the main motive of the brokers.

``If the investor does not exist the broking community will not be there. So also is the case of the regulator". The main objective of the recent regulations like Know Your Client, Sub-Broker agreement etc has been to create a national market where there is uniformity in prices.

Once the system is in place there will be uniformity in treating good or bad deliveries, he added.Once the Chandrasekharan panel report is adopted, the system of share transfer will improve substantially. The delivery period will be reduced to 10 days, he said. The broker should, however, look for two things. He must first check the authenticity of the share that comes to the market.

Once he is satisfied then he should check whether the deliverer is an authorised person.Gehrotra also assured the brokers that the recent steps of the regulator were primarily with a view to safeguarding the risks of the broker. The Medallion process will check the problems of signature verification. In this case the authorised person affixes his stamp which is a guarantee by itself, he said.

``In the Medallion scenario, the risks have to be borne by big firms like insurance companies. These companies will not insure risks unless they are sure of the bona fides of the person they are dealing with. It is with this in view that the Know Your Client Scheme and Sub-Broker agreements have been formulated. Once these are fulfilled the insurance firms will automatically cover the risks,'' added Gehrotra.

On being asked about action against companies that have violated norms post-issue, he said the regulator cannot take any action in this regard.

``After the company fulfills the risk factors regulation and other prescribed norms we grant the clearance. However, after the issue is over and they violate these conditions then it is for the Company Law Board to take action,'' said Gehrotra. He also asked brokers to come forward and participate in the depository system.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.