Capital markets regulator the Securities and Exchange Board of India (SEBI), said it is informally talking to other regulators to adopt its model of uniform know-your-customer (KYC) platform. “We are informally talking to other regulators to adopt our model of having a uniform KYC platform/system, which is beneficial to both customers and market intermediaries alike,” SEBI Chairman UK Sinha said.
He was speaking after launching the country’s first KYC Registration Agency (KRA) by the Central Depository Services at the BSE here. “I hope once this KRA system stabilises, others will also adopt this system,” Sinha said, adding, “Definitely we want to see more players launching such a system as that will bring down the cost of intermediaries by cutting down on their back office management teams.”
On how many such players is he looking at, Sinha said, “It is difficult to put a number. But I don’t see many players in this field as there is no scope for many such platforms. But I want to inform you that we are all for competition.” Noting that CDSL has implemented the KRA platform in record time, Sinha said this is one of the major milestones in achieving customer service from the part of the SEBI.
CDSL Executive Director P S Reddy said the KRA system launched by his agency avoids duplication of customer details, which happens today in the absence of a single-point platform. That apart, it also allows competition as it is interoperable, which means, if a rival agency is put up, market participants can share the data bringing in data uniformity.
Reddy further said the system will also enable intermediaries in meeting compliance requirements in a hassle free manner. SEBI had first issued the draft norms for a KRA system in October last year. On December 2, it issued the final guidelines for KYC registration agencies. A KRA platform can be set up by the wholly-owned subsidiaries of stock exchanges and depositories, other market intermediaries and self-regulatory bodies. This came after SEBI in last August simplified the account opening process for investors. Sinha also said SEBI will soon be launching a mass media campaign to educate retail investors about the simplified KYC norms. “We will soon launch a mass media campaign to educate retail investors,” Sinha said. “Another reason, which is of paramount importance to SEBI, is protecting the interests of the retail investor. If we stick to the FPO route, past experiences have shown retail investors’ interests were not protected.”
