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NEW DELHI, NOV 24: The full-fledged internet trading, including online payment, is not feasible unless cyber laws are enacted, according to D R Mehta, chairman, Securities and Exchange Board of India.
``Internet will only replace the telephone or fax. Payments for the web trading will be possible only after the cyber laws are enacted,'' Mehta said. However, Sebi is likely to put in place the regulations concerning the safety and security of internet trading before December 1999, he added.
Talking to reporters here on the wrap-up session of the emerging markets committee meeting of the International Organisation of Securities Commissions (IOCSCO), the Sebi chairman said the complete cycle of internet trading from booking orders to payments will be possible only after the cyber laws are passed in parliament.
The four working groups of the Pathak committee are studying the legal, technical and safety standards of internet trading. It is said to cut transaction costs, already the second lowest in the world, quicken the trade and facilitate better price discovery.
Asked on the volumes expected via the new media, Mehta said none can stop internet trading ``so there will be volumes''. The Sebi is also likely to approve the recommendations of the Kumar Mangalam Birla committee on corporate governance at its next board meeting in December.
Mehta said all companies willing to list on the stock exchange will mandatorily have to adopt corporate governance principles as laid down by the Birla committee. ``Even if 200 companies covering 90 per cent of stock trading are covered, it will be a major achievement.''
Meanwhile, the IOSCO has mandated a working committee on internet trading to study the impact of internet on securities markets. Its report will be taken up by IOSCO technical committee in Washington next month, Paul K Melly, chairman of the IOSCO executive committee, said.
``Regulatory principles governing traditional trading apply very well to web trading. It is a question of technologies and international cooperation to ensure regulatory compliance from customers and companies,'' he added.
IOSCO has also decided to initiate new work on regulatory issues like corporate governance, framework for the development of domestic secondary debt markets, demutualisation of stock exchanges and investor education.
It made public a report entitled ``causes, effects and regulatory implications of financial and economic turbulence in emerging markets''.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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