Differences of opinion among regulators are back with the markets and pension chiefs airing contradictory views on investment of retirement pool into risky equities. The Securities & Exchange Board of India chairman UK Sinha, and the Pension Fund Regulatory and Development Authority chairman Yogesh Agarwal differed on whether there should be more money funnelled into equities.
"Law and regulation shouldn't prevent pension money from entering capital market," Sinha said at a conference on 'Inclusive Growth & Beyond'. "Pension money will be a long-term fund for the markets." But Agarwal had something else to say.
"We think that at the current stage of pension market, investing more than 50% in equities is not going to be fair to the investors in terms of risk and therefore we tend to retain the cap at 50%,'' Agarwal told reporters on the sidelines of the same conference. "It would not be fair for one regulator to comment on another," he said, leading to murmurs at the venue that there are differences.
With the simultaneo US development of various sectors such as mutual funds, insurance, pensions, there are overlapping of functions between regulators, leading to disputes between them. There were instances of Sebi chairman interfering in the insurance industry and the pension authority seeking jurisidiction over pension schemes of insurance companies.
The Reserve Bank of India is seeking exclusive control over mergers & acquisitions in the banking industry even as the Competition Commission of India is mandated to oversee such transactions in all sectors.
Lobbying is intensifying to have more of the pension funds into equities as in the US under the 401 K plan which was partly responsible for the sustained bull markets for the last two decades, barring a few bursts. But Indian Employee Pension Fund Organisation has been reluctant to invest in equities.
Although the Indian benchmark has been climbing steadily, investors have suffered losses in many non-index stocks. The mutual funds' performance in nearly two decades has not been stellar either to justify equity investments.
The numerous disputes between the regulators led to the finance minister Pranab Mukherjee to take the Financial Stability and Development Council under his chairmanship. Although some, including the RBI Governor Duvvuri Subbarao, feared that it could lead to lesser autonomy for the regulators, Mukherjee went ahead with it.
Even if 15% of pension money is invested in equities, it will raise investible surplus by 1.5%, said Sinha Further, he believes that it could be a buffer against the foreign fund outflows when they happen in violent ways as it did in 2008 during the credit crisis.
Source: http://economictimes.indiatimes.com/markets/regulation/sebi-and-pension-fund-regulatory-airing-contradictory-views-on-investment-of-retirement-pool-into-risky-equities/articleshow/8704942.cms
"Law and regulation shouldn't prevent pension money from entering capital market," Sinha said at a conference on 'Inclusive Growth & Beyond'. "Pension money will be a long-term fund for the markets." But Agarwal had something else to say.
"We think that at the current stage of pension market, investing more than 50% in equities is not going to be fair to the investors in terms of risk and therefore we tend to retain the cap at 50%,'' Agarwal told reporters on the sidelines of the same conference. "It would not be fair for one regulator to comment on another," he said, leading to murmurs at the venue that there are differences.
With the simultaneo US development of various sectors such as mutual funds, insurance, pensions, there are overlapping of functions between regulators, leading to disputes between them. There were instances of Sebi chairman interfering in the insurance industry and the pension authority seeking jurisidiction over pension schemes of insurance companies.
The Reserve Bank of India is seeking exclusive control over mergers & acquisitions in the banking industry even as the Competition Commission of India is mandated to oversee such transactions in all sectors.
Lobbying is intensifying to have more of the pension funds into equities as in the US under the 401 K plan which was partly responsible for the sustained bull markets for the last two decades, barring a few bursts. But Indian Employee Pension Fund Organisation has been reluctant to invest in equities.
Although the Indian benchmark has been climbing steadily, investors have suffered losses in many non-index stocks. The mutual funds' performance in nearly two decades has not been stellar either to justify equity investments.
The numerous disputes between the regulators led to the finance minister Pranab Mukherjee to take the Financial Stability and Development Council under his chairmanship. Although some, including the RBI Governor Duvvuri Subbarao, feared that it could lead to lesser autonomy for the regulators, Mukherjee went ahead with it.
Even if 15% of pension money is invested in equities, it will raise investible surplus by 1.5%, said Sinha Further, he believes that it could be a buffer against the foreign fund outflows when they happen in violent ways as it did in 2008 during the credit crisis.
Source: http://economictimes.indiatimes.com/markets/regulation/sebi-and-pension-fund-regulatory-airing-contradictory-views-on-investment-of-retirement-pool-into-risky-equities/articleshow/8704942.cms
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