Mehta disclosed that Sebi was considering a proposal made by the Over-the-Counter Exchange of India for trading in unlisted securities. ``The proposal will be taken up shortly and a decision will be reached in the next board meeting, likely to be held in September,'' Mehta added. He pointed out that only qualified institutional investors will be allowed to trade inunlisted securities since ``they had the requisite research base to take a decision on investments in these companies.''

``On the other hand, a retail investor may end up losing money for lack of sufficient and reliable information about the company,'' he added.

However, retail investors can participate in trading of unlisted securities through mutual funds although it is not clear whether mutual funds come under the ambit of a qualified institutional investor.

The Sebi chief said that the market watchdog had fixed November 30 as the deadline for all the bourses to be Y2K compliant. ``They are still 10 bourses which are not Y2K compliant and six of them may have to close down if their systems are not Y2K compliant,'' he disclosed.

Mehta opined that Indian markets had matured considerably and was slated to emerge as one of the very large markets in the world in few years. ``The combined turnover of BSE and NSE is already higher than Hong Kong and in the next two years, the turnover is expected to comecloser to Tokyo which has a business of $2.5 billion,'' he said.

On being asked whether Sebi was worried on the large outstanding positions on the bourses, Mehta said that it was not a cause of concern as there were a system of stringent margins in place to take care of any eventuality.``Six years ago, the combined daily turnover in the country was only Rs 400 crore which today stands at Rs 8000 crore. The margins from certain settlements are alone Rs 1500-1600 crore,'' he added.

On demat, Mehta was hopeful that by the end of the year, 90-95 per cent of trading will be in demat form. ``With demat in place, markets have become lot safer for trading,'' he said.

Mehta strongly defended the stringent disclosure norms for companies tapping the primary market. He said that criticism of Sebi for killing the primary market was unfair. ``There is no point criticising Sebi for the state of the primary market since Sebi is there to protect the interest of investors,'' he pointed out. Referring to PHDCCImembers, Mehta said that what could Sebi do for the primary market if ``your friends are raising money abroad.'

India third in transaction cost for MFs

India has the third lowest transaction costs for mutual funds and foreign institutional investors among ten markets which include the US, Hong Kong, Australia, Singapore, Indonesia, UK, China, Malaysia and Thailand. The study, conducted by Sebi, states that transaction costs are the lowest in the US followed by Hong Kong. The transaction costs in India are 35.58 basis points while it is 35 basis points in Hong Kong. In the US, it is at 0.01636 per cent. The highest transaction cost is in Chinese markets at 124 basis points while it is 101 basis points for Austarlia.

``The transaction cost for institutional investors lower than those of markets like Singapore and UK while we are not very far away from Hong Kong,''Mehta said.

The study points out that there has been a decline in transaction costs in the past few years, primarily on account ofdemat and gradual reduction in bad delivery. The average transaction cost has declined by 60-75 per cent for institutional investors mainly on account of aforesaid factors. However, due to higher brokerage, the average transaction cost is higher for retail investors.