The Parliamentary Standing Committee on Finance has drawn Securities and Exchange Board of India (Sebi) attention to the growing role of retail investors in equity markets and discusses its impact on market functioning.

       The panel learnt to have also cautioned the regulator on speculative trading activity, which could lead to spike in volatility, said regulatory sources.

       The panel, chaired by Jayant Sinha, has also reviewed outcomes of the measures taken by Sebi in the key cases including-- Franklin Templeton, brokers default, and financial crisis at IL&FS and Dewan Housing Finance.

       “We discussed a wide variety of issues today with Sebi ranging from regulatory scope, surveillance, and recent policy measures. The Committee discussed the functioning of the capital markets in light of recent volatility and what needs to be done to ensure that markets continue to function smoothly through different market conditions.

       We also spoke extensively on capital flows into the capital markets coming from different sources including foreign investors, retail investors, and domestic institutions, Jayant Sinha told Business Standard

       According to the market experts, the influx of new investors is boosting trading volumes in the secondary market. This share of individual retail investors in NSE’s cash market turnover has shot up from 39 per cent in FY20 to 45 per cent in FY21. This share has gone up further, they say.

       Retail participation in equity market has reached an inflection point due to the low interest rate regime, and with prospect of economic growth, the years ahead will see more people tapping into the merits of trading and investments in our markets, expert added.

       It is learnt that the panel has asked Sebi to furnish detailed reports on some key issues as it believes that measures taken so far in these cases didn’t fetch the desired outcomes.