The issue of Sebi's jurisdiction to regulate manipulators abroad came in for a strong debate at Thursday's meeting attended by top Sebi, Reserve Bank of India (RBI) and stock exchange officials. Sebi officials, however, felt that even today a client based abroad can buy or sell shares and can hence manipulate the market so there is no new risk that the latest move of Sebi would bring about.

This might, however, prove to be a mistaken sense of optimism considering that turnover and investor interest from clients abroad is going to rise significantly once they are allowed to witness transactions carried out on their behalf. That in fact is the whole idea of allowing brokersto set up terminals abroad. This will also lead to eliminating the need to have a representative in India to oversea the collection of contract note etc. "As of now, Sebi could catch hold of this representative, but now there would be no need for a client abroad to have a representative. How are they going to catch an errant client", said an expert closely associated with the regulation of the markets.

"Even today a client abroad can send across through fax a transaction request. So there is no new risk being created", said a Sebi source. "When clients in India refuse to comply with Sebi's summons the issue of getting Sebi to issue summons to clients abroad looks rather far fetched", observed an expert in a lighter vein. There is a flip side to this. That if a client can get away with manipulation here, there is virtually no stopping him once he goes abroad. This does not augur too well for the integrity of the markets.It was finally decided that while legislative changes to allow Sebi to have territorialjurisdiction would take a long time, the strategy to prevent manipulation would be to crack down on the concerned broker. This may not go down too well with brokers, who have from time to time held that they cannot be held responsible for the acts of clients considering that they have limited access to them and it is difficult to fully check their bonafide.

"Even though the move to allow brokers to set up terminals abroad is a great one in the overall context of growth of the markets, adequate steps would need to be taken to prevent manipulation", felt an expert.

Large brokers who will perhaps be the only ones to reap the benefits of the move have welcomed the move. "This will lead to much higher business coming in from clients abroad. We have three officies abroad and stand to gain immensely", said a source at Kotak Securities.