Securities and Insurance Laws (Amendment) and Validation Bill, 2010
Posted by: Uma Shashikant on Mon, Aug 2nd, 2010
It is sad day for financial market regulation as the Lok Sabha passed the Securities and Insurance Laws (Amendment) and Validation Bill, 2010. The ordinance validates the ruling the government made in the Ulip row between Sebi and Irda, even as Sebi's has petitioned the Supreme court. to have decided the case in favour of Irda, without as much as a hearing, and to have validated it as an ordinance, is a shame. The backdrop to the formation of the new committee set up by the same Ordinance to resolve disputes between financial sector regulators could not have been worse.
Jayant Varma wrote a very good blog on why the Committee is a bad idea. http://www.iimahd.ernet.in/~jrvarma/blog/index.cgi/Y2010/time-for-FSAT.discuss
He points out that the interpretation of law should be left to the judiciary and the executive should only implement what has been legislated by the legislature or interpreted by the court. For the Government to have hurried with the Ordinance even without waiting for an interpretation by the court, and to have created an executive body to arbitrate would be a faulty regulatory design. He argues that the Appellate Tribunal would have been a superior mechanism and also find serious drafting errors in the Ordinance.
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