Sebi Chief Pandey Completes 1 Year In Office - Mantra Of Promoting Investments While Balancing Investor Protection

Tuhin Kanta Pandey completed a year in office as the chairman of the Securities and Exchange Board of India (Sebi). His tenure has been marked by several key regulatory reviews and overhauls. The markets regulator, under his tenure, has focused on boosting ease of doing business, deepening markets, removing regulatory overlap, while also balancing it by clamping down on speculative trading in a time when global markets are riled by economic and geopolitical uncertainties.

Pandey took on the role as the 11th chairman of Sebi amid a turbulent phase. Pandey, coming from a background in an IAS office and a seasoned veteran bureaucrat of the finance ministry, succeeded former chairperson Madhabi Puri Buch. Pandey has held several critical roles before his stint in Sebi, including as the secretary in the Department of Investment and Public Asset Management, supervising the divestiture of Air India and the Life Insurance Corporation of India.

Since taking on the role as chairman, Pandey has forwarded the idea of a reform as a market regulator while also adhering to the core object of Sebi set in the preamble- “to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto.”

In an interview with Outlook Money at the company’s 40After40 Retirement Expo held earlier in Mumbai, Pandey said, “There have been many investor-friendly measures since I took over.” Here is a look at some of the key reforms undertaken by Sebi, under Pandey’s chairmanship.

Ease of doing business and investments

Ease of promoting business and investments has been at the core of the reforms made by Sebi over the past year. To this end, the markets regulator has introduced technological reforms and created platforms to help companies raise capital or in mergers and acquisitions. Sebi also brought reforms to the mutual fund regulations, to reduce the mandatory investment requirements and adjust lock-in periods.

Sebi has also amended the disclosures relating to environmental, social and governance (ESG) norms for companies, promoted investments in real estate investment trusts (REITs) and infrastructure investment trusts (Invits) to deepen markets. The Sebi has also undertaken ease of investments for persons with disabilities by introducing digital KYC processes. In addition to this, Sebi also revised the regulatory frameworks for alternate investment funds (AIFs), positions of non-resident Indians (NRIs), among others.

Promoting Investor Protection and Empowerment

To this extent, Sebi has worked to remove regulatory hurdles and overlaps, while also deleting redundant clauses in policies. Among the few changes taken over the past year, Sebi has streamlined sponsorship criteria for mutual funds. Sebi has called for the reorganisation of the roles and responsibilities of trustees and asset management companies (AMCs). Prudential investment limits and valuation of securities have also been reorganised. These steps, which were also to increase transparency, especially in the digital space, to inform investors and boost ease of compliance, were the focal point of these changes.  

In the interview with Outlook Money, Pandey had said, “There appears to be some overlap between distributors and advisors. Earlier, we followed a more puritan model when framing investment advisor regulations. Now we have a working group examining whether some convergence is possible — essentially a via media approach.”

Sebi, over the past year, has introduced sectoral debt funds, streamlined existing categories to remove regulatory overlap or miss, and rationalised flexibility across mutual fund categories. Additionally, Sebi has also introduced life cycle funds, taken an investor-centric approach in enhancing disclosures for overlap in portfolios across debt, equity and hybrid categories.

Fostering Market Development

Sebi has taken several measures to boost market participation and promote different classes and products across the capital and cash markets. Among its many actions, Sebi has permitted preferential treatment and special discounts for certain investors in debt, such as women and senior citizens, among others. The ESG framework for debt securities, such as green debt securities, was also expanded in this regard. The operational process for cash flow disclosure in the corporate bond database was simplified by Sebi. The markets regulator also introduced closing auction sessions in the equity cash segment and amended the framework for social stock exchanges.

Along with widening the investor base for different capital market products, Sebi has also taken measures to strengthen the equity derivatives market. In this regard, Sebi has taken measures to enhance trading and risk monitoring of equity derivatives. Sebi also announced that the benefit of offsetting positions across different expiries shall not be available on the day of expiry for contracts expiring on that day for single stock derivatives.

In an era when retail participation is ever-increasing, and global capital flows are in a complex state, Sebi is trying to keep a balance between deepening the domestic market while also remaining grounded through a consultative but an ambitious approach.

In Pandey’s own words, it is a time in the markets where “Investors should shift from short-term speculation to disciplined long-term investing. Responsible investing aligned with life goals can significantly improve financial outcomes.”

“We have also implemented several reforms in mutual fund regulations to improve transparency and reduce certain costs. More reforms are in the pipeline. One upcoming focus area is addressing the proliferation of thematic mutual funds, where overlaps sometimes confuse investors. We will continue strengthening investor awareness and transparency so investors can make more informed decisions,” Pandey had said in the interview with Outlook Money.