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Capital Markets Summit: Refreshing Change: Setting new standards underway in Sebi

Recent Conclusion Capital Markets Summit of the FICCI, hosted a number of regulators and policymakers as speakers. In the last few years that I have hosted this conference, this year we have seen a dramatic and fascinating shift in the regulatory approach.

The change is obvious and significant. There is already a clear direction in which the regulatory framework will be directed. There has been recognition of the importance of the views of market participants and their problems. Focus on the logic and data behind the regulatory changes. And there is a recognition that the role of regulators goes beyond regulation, to nation-building.

Opening remarks, Chairman, Sebi, sent a clear message that Sebi’s regulations are disclosure-based and not intended to be restrictive. For any product or transaction on the primary or secondary market, there may be more requirements for full disclosure, but the aim will not be to stop everything. She emphasized that as a country, we are not a “nanny nation” that will dictate what people should do.

Another standout aspect of her speech was about following the consultative approach. She invited suggestions from market players, participants, practitioners and industry associations. The interdependence of the regulator and the market participants can be clearly seen by the recognition that the market is active and powerful only because of the participants. While it is important for market participants to work with regulators and within regulations, regulators are also committed to finding solutions to the problems that participants must face. face for the market to develop properly. One notable move is that a dedicated officer has been appointed in every Sebi division, who is tasked with developing the market and recommending improvements.

While the Chair welcomes practical suggestions from market participants and industry bodies, there is a clear tension about making specific recommendations supported by concrete data to address the issue. prove the same. Obviously, a general comment or an anecdotal case can hardly be entertained. But there is an absolute openness to receiving actual suggestions for improvement if they are supported by background work, logic and adequate data. To me, it means two visible and transformative changes – one, regulators know their business and two, the days of joint lobbying are over.

She explained very clearly the logic and structure of the regulatory framework that will be a combination of principle-based and regulation-based. While there has been a well-founded debate about the principles-based v/s regulatory approach, I agree that with our current regulatory structure, a move to a more complete Entirely rule-based can be difficult. The right combination of the two, supported by facts and data, can be an appropriate approach for the time being. Maybe as our market grows and matures further, leaning towards a principles-based approach with surveillance system modernization could be the right combination.

At the same time, it is clear that a disclosure-based framework, or a combination of principles and regulation-based frameworks, will not dilute the need for compliance. There will be no compromise to the compliance or orderly functioning of the market and violations will be dealt with appropriately.

A regulatory body that is well aware of its role in nation building, ready for constructive, progressive dialogue and focused on market development, is certainly unique. Today, we often talk about global standards on policy issues. Given the refreshing attitude we witnessed at the conference, it may not be far away when our regulators will set a global standard made in India.

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