Readers of Moneylife are aware of our long campaign for a ‘statutory’ electronic filing system to centralise corporate information and make its accurate reporting mandatory. The listing agreement of stock exchanges requires companies to make a series of disclosures and announcements to bourses, but this has proved to be inadequate, cumbersome to search and most user-unfriendly. Firstly, stock exchange websites are not structured for filing, dissemination and retrieval of information required by investors, potential investors, academics and researchers in a consistent manner over a long period of time. Worse, although stock exchanges administer the listing agreement, they make no attempt to ensure compliance or even verify the statements made by companies. So a statutory, central, electronic filing system like EDGAR (of the US) was absolutely essential. But nearly a decade after it tried to put in place a similar system through EDIFAR (Electronic Data Information Filing and Retrieval system), SEBI has admitted failure and pulled the plug on this already defunct system from 1 April 2010. Instead, it has opted for Corporate Filing and Dissemination System (CFDS), a system jointly set up by the BSE and the NSE and maintained by a private company (www.corpfiling.co.in). This exercise was started even without killing the dysfunctional EDIFAR.
Interestingly, just a few months ago, a white paper prepared by a Hong Kong-based company had recommended merging CFDS with EDIFAR, but following the structure of EDIFAR to organise the information and make it more accessible. It also concluded that EDIFAR, with all its flaws, was better organised than CFDS which was also slow and frustrating to access. SEBI hasn't thought it fit to explain if, or how, CFDS is an improvement on EDIFAR. Only time will tell whether this works to the benefit of investors or goes the way of EDIFAR.— Sucheta Dalal