I would like to convey my good wishes to all of you and thank you for reposing faith in me. Starting as a pressure group for broking industry we have traversed a long path, crossing many milestones. ANMI today has become one of the most influential voices in the Capital Markets. It is a result of the sincerity and commitment with which our Past Presidents, Regional Chairmen and all Directors have worked over the years. A lot has been achieved over the period, but this is not the time to rest on our laurels.
Revenue generation at the Members level is the most important need of the hour. In addition, Broking industry suffers from lack of participation of the retail investor, over regulation and high cost of transactions. ANMI shall take initiatives like requesting the Exchanges to provide interest on the security deposits of the members, introduction of new products to boost the financial viability of our members. We would also explore all the options to ensure that members' deposit with OTCEI is refunded to them. We would also request MCX-SX to refund the deposit from the members or at least interest be paid on these amount. There is a strong case in the matter, as Exchanges are not merely commercial entities but are also fulfilling public utility services, in somewhat non-competitive environment.
Instead of leveraging the pan India network of brokers and sub-brokers to promote financial literacy and mobilization of savings, they have been burdened with compliances making them financially unviable. A host of issues like, multiple taxation (STT, Service Tax, etc.), lack of uniformity in Stamp Duty, multitude of inspections have made the working environment extremely challenging and costly for the whole industry. We will also continue to push our demand for treating STT and CTT as advance tax payment under Section 88E of the Income Tax Act, 1961.
Every regulation imposes a cost on the market and therefore there should be a rigorous ex-ante analysis before it is made effective. Placing undue regulatory burden on selective market participants cannot protect the whole system. ANMI has been, and would continue to be, in a continuous dialogue with SEBI, other regulators and GOI to smoothen the regulatory burden without compromising the safety of the market or the investors. We plan to work on the regulations in the near future to segregate them based on Systematic Risk Control measures, Market Developmental Requirements and Over Regulation, so that we can focus on removing redundant and clerical compliances. ANMI has taken a number of initiatives to reduce the compliance cost of our Members and smoothen their working.
While we may not agree with the Financial Sector Legislative Reforms Commission (FSLRC) report in to-to, I do believe that our financial sector needs further legislative reform. ANMI with its avowed goal to work for the development of the capital markets will put its weight behind these measures, specially the recommendations on the guidelines for formulation of rules and regulations for market intermediaries and the development of overall Capital Markets.
The NSEL fiasco is a big set back to the whole industry. We sincerely hope that Government and the legal process will be able to amicably sort out the problem so that investors get their money back. It is basically the failure of NSEL. Any move towards implicating brokers at large is unwarranted.
There are several reports about failure of certain broking entities towards their client obligations. ANMI is seriously apprised of the situation. If it is found that client's funds have been appropriated by any of our members; it is serious violation of code of conduct as prescribed by your Association. If proved, it will definitely lead to notice for termination of membership of those entities.
India needs a massive investment in almost all the sectors of the economy. Though the savings ratio of the households (as a percentage of GDP) is high, a large part of it is parked in non-productive sectors like land/real estate, gold etc. whereas the productive sectors of the economy are either starved of capital or face a prohibitive cost of borrowing. We believe that with proper support from the regulator and the government, ANMI can play an extremely important role in nation building by helping in capital formation for all sectors of the economy. Even secondary debt market needs a strong impetus and can become important driver for resource mobilization. SME exchange is another area we will focus upon. We plan to hold International Convention on the above theme in collaboration with Government of India, SEBI and Exchanges.
With an aim to strongly interlink the regional financial systems starting with the harmonization of financial regulation, ANMI has taken the initiative to form South Asian Securities Association (SASA), a federation of brokers' association and also work towards formation and setting up of Integrated Financial Market: Trading, Clearing and Settlement Platform for SAARC Countries. This will be set up in an International Financial Centre like GIFT (Gujarat International Finance Tec-city), providing new business opportunities to members on one hand and international investment opportunities to the investors and resource mobilization across countries for the Corporates.
Some organizational changes have been made. It has been decided to constitute a new Committee at the central level, in addition to existing committees, to guide regions to take up focused activities like member awareness program, compliance and business development seminars etc. We will also have at least one members' meet each, in all four Regions along with the Board Meetings, with the President and the Directors. We will also set up Video Conferencing Facilities at the Regional Centers from the central corpus, so that we can have frequent committee meetings in a cost effective manner. The Regions have already been requested for setting up of Regional Chapters in different cities like Ahmedabad, Jaipur, Kochi, Kanpur, Patna, etc. Efforts would be made to have more regional activities to forge strong fraternal bond. We are also setting up Task Force to take targeted approach on Self Regulatory Organisation (SRO), Financial Sector Legislative Reforms Commission (FSLRC) and South Asian Securities Association (SASA).
The country is going through interesting times. I have a strong belief that there is so much to be done as far as the Indian financial system is concerned and ANMI, as a leading and influential association, should be at the forefront of it. I am fortunate to have an enviable team of highly skilled and knowledgeable Alternate President, Regional Chairmen and the Board of Directors. Having said that, the above initiatives would be difficult to pursue without a proactive participation by the members. I not only look forward to your support but also guidance to be able to fulfill my responsibilities as the President of ANMI.
With Best Wishes,
Gopal Krishna Agarwal