CALCUTTA, Oct 6: The market surveillance function will become more focussed with the regulator asking stock exchanges to delegate secondary functions like margin collections to the market operations department, says the new executive director of Calcutta Stock Exchange Tapas Dutta. This, he says, will ensure that the market surveillance job does not get diluted and the day-to-day monitoring of trades and detection of major violations of trading norms by members is more effective.

According to Dutta, SEBI also wants the internal inspection job, hitherto with the market surveillance department of the exchange, to be delegated to a specialised team of administrative staff set up for this purpose. The findings of this team will be submitted to the regulator and any further scrutiny, wherever necessary, will be done by the regulator itself. The idea is to minimise the role of elected directors in matters where there is possibility of a "conflict" of interests and where their "perceived bias" is likely to show, adds Dutta.

Preliminary investigations into cases of indiscipline will be done by the executive director with the assistance of professional managers of the exchange. Once an offence is established, it will be referred to the disciplinary action committee. Tapas Dutta, one of the few EDs to have risen from the ranks, feels that progressively the executive director would have to take the responsibility to ensure that the exchange functions as a true self-regulatory organisation (SRO).

Dutta believes that self-regulation is unavoidable. He says, "Part of my responsibility is to see that the exchange functions like a true SRO. Only peer pressure can ensure this transition. When the majority realises the merits of having a code of conduct, the rebels will have no choice but to fall in line and adhere to the requirements of the regulator. We should be able to reach a situation where minimum discipline is necessary if the responsibilities that come with an SRO status are taken in the right spirit. If stockbroking has to grow as a profession, then it must be self-regulated. The regulator is required only at a level beyond self-regulation."

On his immediate priorities, Dutta said he will ensure that necessary changes in the regulatory and developmental aspects of the exchange's working are brought about. "All EDs have have had to reconcile themselves to this process of change in small doses. At the end of the day, if I succeed in effecting these changes, I will have done my job," he points out.

Explaining his role, Dutta says on the regulatory side he will like to see that SEBI rules are enforced through "continuous surveillance". On the development side, the tasks have been clearly identified by the president which includes establishment of a trade guarantee fund, a clearing corporation and setting up of a modern stock exchange complex.

He, however, clarified that the board has to play a crucial role in bringing about sustained development of the exchange. "Active inputs must come from the elected directors. The ED will see to it that these decisions are translated into reality."

On why he accepted the job of an ED which carries a fair element of risk and sacrificed a permanent and secure job, Dutta said it was a natural extension of the market surveillance job he was performing. "I am fully aware of what the executive director is supposed to do. The very fact that my job is of limited tenure makes me conscious of my responsibilities. If I am able to satisfy my governing board, I have nothing to worry," he adds.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.