In A fast integrating global financial system, regulatory arbitrage is a term that has found great currency among regulators. A few months ago, the Reserve Bank of India governor spoke about regulatory arbitrage in context of non-bank financial companies (NBFCs). He stated that NBFCs, above a certain size, would be subject to closer monitoring and regulation, and in line with the regulations applicable to commercial banks. It was felt that foreign banks were getting around many RBI restrictions - such as capital adequacy requirements, lending limits, risk spread, restriction on branches expansion - by setting up wholly (or predominantly) owned NBFCs.
More recently, in a key note address at a capital market seminar, the Sebi chairman referred to regulatory arbitrage while speaking about reviving OTCEI. This has become a "hot" subject as a number of Indian companies are getting listed on the London Stock Exchange's Alternative Investment Market (AIM), which is akin to OTCEI. The Sebi chairman stated that it would not mean that companies would get any arbitrage benefit in choosing one stock market over the other and take the benefit of lesser disclosures, diluted corporate governance standards etc. It is indeed laudable that India's two foremost regulators have rightly identified and taken necessary action to arrest regulatory arbitrage in a number of areas. However, there still does exist regulatory arbitrage, even perhaps inadvertently, when it comes to saving products regulated by different regulators. Let us look at how insurance products (especially ULIPs), MP units and bank deposits treat two important aspects - risk factors and celebrity advertising.
More recently, in a key note address at a capital market seminar, the Sebi chairman referred to regulatory arbitrage while speaking about reviving OTCEI. This has become a "hot" subject as a number of Indian companies are getting listed on the London Stock Exchange's Alternative Investment Market (AIM), which is akin to OTCEI. The Sebi chairman stated that it would not mean that companies would get any arbitrage benefit in choosing one stock market over the other and take the benefit of lesser disclosures, diluted corporate governance standards etc. It is indeed laudable that India's two foremost regulators have rightly identified and taken necessary action to arrest regulatory arbitrage in a number of areas. However, there still does exist regulatory arbitrage, even perhaps inadvertently, when it comes to saving products regulated by different regulators. Let us look at how insurance products (especially ULIPs), MP units and bank deposits treat two important aspects - risk factors and celebrity advertising.
1 comment:
This book really exhibits a lot of knowledge ...
Sir I need the book "Regulatory Arbitrage (part - 1)". How can I get it. I hav also joined the community ....
Post a Comment