Addressing the fourth annual Invest India Securities Industry Summit here today, National Stock Exchange (NSE) managing director RH Patil lamented that exchanges had little powers for enforceability. ``Let us not pretend that we can enforce discipline,'' he added.

Even as domestic stock exchanges have come along way in setting up surveillance systems little attention has been paid to the aspect of enforceability, Interconnected Stock Exchange (ICSE) managing director Joseph Massey said. ``We are powerless when it comes to ensuring compliance at the client level,'' he said.

Participating in the panel discussion, Securities and Exchange Board of India (SEBI) senior executive director L K Singhvi called for a regime for preventive compliance. He emphasised on the need for effective compliance at the lower rung of theregulation pyramid and suggested a rule-book and surveillance systems at the intermediary level that could be subject to inspection by SEBI and the concerned self regulatory body.

Bombay Stock Exchange (BSE) president Anand Rathi also felt the laws were not adequate to empower the exchanges to go beyond surveillance mechanism.

Earlier during his speech on corporate governance, Unit Trust of India executive director Basudev Sen said that the boards of corporates should not confuse their role with that of the management and restrict themselves to a supervisory role. ``Board is not the management,'' he said. Illustrating the concept with an example, Sen said in certain countries, managers or their relatives were not allowed on the boards of organisations.

He said too much board interference in the decision making process of the organisation could lead to bad governance. Making a distinction between good performance of a company and good governance, Sen said the two may not always be related to eachother.

The nominee directors from financial institutions on company boards should not merely look after the interests of the institution they were representing, but also that of minority shareholders, he said.

Talking about UTI's initiatives in inculcating good governance practices in companies, Sen said for the last two years the Trust has been writing to companies -- where it has a stake -- questioning them about certain resolutions and actions taken by them.

Addressing the summit, the Reserve Bank of India (RBI) Deputy Governor Y V Reddy hinted at increased application of open market operations (OMOs) and Repos to manage liquidity in the economy and lesser reliance on the traditional monetary control instrument of the cash reserve ratio (CRR).

``The use of CRR as an instrument of monetary is sought to be de-emphasised and the liquidity management in the system is increasingly undertaken through OMOS, both outright and Repos,'' Reddy said, adding that except on occasions of exchange rate volatility,the excess liquidity in the system has been mopped up by Gilt sales by the RBI.

He said that the recently introduced interim liquidity adjustment facility (ILAF) has facilitated the evolution of an interest rate corridor, that was informal with the bank rate being the cap and the fixed Repo rate the floor.

He further said the external and financial sector reforms have enhanced the sensitivity of quantity variables to their market-determined exchange and interest rates. ``It must be recognised that the emphasis has also been on monitoring different indicators apart from relying on the intermediate target of broad money,'' he added.