Speaking at the Invest India Conference on the securities industry here on Wednesday, Khan said the government should give more freedom to FIs, especaily institutions such as the Life Insurance Corporation (LIC) and the General Insurance Corporation (GIC), to participate in the market.

Khan also called for a further liberalisation in the deployment of contractual savings such as pension and providend funds. A vibrant secondary market for corporate debt needs to be created through market making and debt securitisation, Khan said.

There is a growing reliance on capital market and equity financing, said New York Stock Exchange vice president, James E Shapiro in his inaugural address. India should adopt globally accepted standards of disclosure, regulation and treatment ofshare holders, he added. "Competition for capital will be fierce as regulatory and policy barriers to movement of capital reduce", he said.

Echoing his thoughts, the president of Nasdaq International, John T Wall said that as their products compete in the global market, companeis will also need to raise capital at international prices.

"Markets will be consolidated and the next couple of years will see the closing down of some stock exchanges", Wall said adding that markets without liquidity would be the first to close as pricing has to be continuous and reflect the market.

When the New York Stock Exchange closed on October 27 last year in the wake of the south-east Asian crisis, the Nasdaq traded one billion shares and its market makers pumped in an `unprecedented' US$ 278 million, he said. Any efficient market should provide an engine for capital formation and better pricing for an existing company, Wall added. The Nasdaq, which lists 90 per cent of American software and hi-tech companies, has over3000 speaciality mutual funds which enable better pricing as a specaility fund can evaluate better than a generalist, he added.

Indian software companies are the world's envy and as Indian products compete worldwide, Indian companies would also need to raise capital at international prices and "for this they need to conform to greater transparency requirements of these markets", Wall said.

There is a tremendous appetite for software and hi-tech companies at Nasdaq, he said adding that some Indian software companies are more mature than some listed on the Nasdaq. "It is not difficult to present accounts as per the US GAAP", he said.