After a bitter and public fight between securities regulator SEBI and insurance regulator IRDA, the surprising winner is IRDA. To recall, SEBI had barred all new issuances of ULIPs which are like mutual fund with a bit of insurnace plugged in. IRDA which had claimed full jurisdiction over the product could not do much as the SEBI order was a quasi judicial order and could only be set aside by a court of law.
In fact IRDA was working hard behind the scenes and is probably responsible for a highly secretive ordinance published on the 18 June 2010 by the government. The ordinance amending various financial laws was passed with such delicacy that even senior people in the finance ministry had no whiff of its creation. Neither did anyone at SEBI have a clue of the impending loss of the war.
While ULIPs are badly regulated instruments, SEBI’s attitude of going it alone without any consultation with the government and then making a public ugly spat with another regulator did not go down well with the government. This was a rude end to a crudely fought battle which should not have occured. Regulators world wide have differences particularly with jurisdiction of instruments and they are fought at a more intellectual plane – see the 30 year dispute between the US SEC and the US CFTC on futures on stocks which resulted in a long stalemate.
Also created by the ordinance is a specific committee to rule on the jurisdiction fights over financial instruments between SEBI, IRDA, RBI and PFRDA. More on that in another post.
See the ordinance here.
No comments:
Post a Comment