- While a number of online broking platforms are now offering seamless access services in overseas markets, there is an urgent need to take effective measures to safeguard the interests of investors.
In India, the sword is currently hanging over digital currency i.e. cryptocurrency and digital gold. In case the government decides on cryptocurrency, SEBI has already imposed strict controls on digital gold.
In a circular issued last month, the Securities and Exchange Board of India (SEBI) said it had barred investment advisers from marketing their customers digital gold and "other unregulated products". In other words, investment advisers are reluctant to recommend their clients to invest in digital gold because such products are "unregulated products and violate trading rules." Digital Gold will not be considered as securities / securities as per Securities Contracts (Regulation) Rules.
Earlier in the month of August, the National Stock Exchange (NSE) had directed stock brokers to stop selling digital gold on their platforms.
In a market full of innovative products and services for investment, such directives are now appropriately leading not only to digital gold, but to a broader debate that has long stalled how Indian financial regulators plan to control innovation. Is it
The new asset class is either a systematic product according to the rules, such as real estate investment trusts or infrastructure investment trusts, or digital gold based on technology, cryptocurrency, even binary options and 'contracts for differentiation'.
It usually involves a harmonious, consultative process between industry and regulators to develop a framework in which such products are born, the necessary factors are added, the design is prepared and implemented by the industry before the authorities take strict action. Is.
If anyone remembers, a decade or more ago, a number of art funds in the market, which were set up to invest HNI funds in arts / collectibles, faced such regulatory action. Numerous such funds have in fact appealed to SEBI to regulate, simply requesting that existing laws, such as collective investment schemes, not be re-enacted in products that require thorough regulatory maintenance. Not only are investment products the subject of regulatory action, but the structure for investing in foreign securities or artificial intelligence-based robot-advisory investment services remains unclear. Notably, a report by a SEBI committee years ago highlighted the need for marketing guidelines for offshore financial products, as India currently has no clear policies or rules in this regard. Lack of awareness of products with attractive advertisements and easy click-through execution reduces the risk-taking tendency of retail investors. However, quick - meaningful regulatory intervention during this phase is often limited by current legislation and regulatory action.
Regulatory agencies can wait a long time for a solution, but in the meantime unfortunately the biggest losers are the investors who should be protected by the regulator.
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