FIIs to be permitted to submit appropriate collateral

NEW DELHI: With a view to strengthening the capital markets, Foreign Institutional Investors would be permitted to submit appropriate collateral, in cash or otherwise, as prescribed by the Securities and Exchange Board of India (SEBI) when trading in derivatives on the domestic market.

Presenting the Union Budget for 2005-06 in Lok Sabha, Finance Minister P Chidambaram on Monday said that SEBI had also been authorised to set up a National Institute of Securities Markets for teaching and training intermediaries in the securities markets and promoting research.

In order to ensure that the corporate bond market is further strengthened and catches with the equity market, the definition of ''securities'' under the Securities Contracts (Regulation) Act, 1956 has been amended so as to provide a legal framework for trading of securitised debt, including mortgage-backed debt.

A high-level expert committee on corporate bonds and securitisation will be appointed to look into the legal regulatory, tax and market design issues in the development of corporate bond market, he said.