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At the FICCI India's Annual Capital Markets Conference (CAPAM) 2022, SEBI Chairperson Madhabi Puri Buch spoke about SEBI’s objective, pace of regulations and its approach.
Overall, Madhabi’s speech gave much needed clarity on the regulatory aspects of SEBI.
Let us look at some key highlights from Madhabi’s developmental and forward-looking speech:
SEBI’s key focus area
SEBI’s key objectives are - facilitate capital formation in the economy and build trust among people in the capital markets. And trust can be built through transparency.
Bottomline: The regulator will pay more attention to increasing transparency.
Regulatory stability
There can’t a regulation that remain unchanged for years. Since the world around us like businesses and markets have been evolving at a faster pace, our regulations have to keep pace with it to remain relevant.
World around us is moving at a speed of 100 km per hour, can we run a regulation with speed of just 10 km per hour. It’s not possible.
While there will be stability in terms of nitty gritty and operation aspects of business, the overall regulatory approach will keep evolving.
Remember, existing regulation may or may not be relevant in today’s world.
Bottomline: Expect frequent regulatory changes. While there may be some difficulty, it will ensure long term growth of the industry.
Broader approach
What corporates do is none of SEBI’s business but how they do matter a lot to the regulator. Do what you believe but do it by adhering to the regulations and disclose everything about it.
Remember, we are in disclosure-based regime. Disclose everything and leave decision to investors.
Regulator has a lot to do if a company fails to deliver well on the disclosure part. A simple and full disclosure protects both parties – the disclosurer and the disclosed.
Also, data is the key to make regulatory changes. Every policy that SEBI makes is backed by data.
Bottomline: SEBI believes that disclosure is key to build trust. So, expect constant improvement in disclosure standards.
Advisory committees
Markets are complex and dynamic and it is difficult to fully appreciate every perspective. SEBI doesn’t believe that it knows everything. Hence, it relies on consultation.
SEBI generally agrees with recommendation of advisory boards 80-90% of the times. But only after understanding the perspective and its impact.
Our doors are always open to recommendation but it has to be actionable and specific.
SEBI supports developmental policies. In fact, the regulator has a system in place in which it encourages the internal departments to implement policies which will be facilitative for the industry.
Bottomline: Keep sharing your views with the regulator. Any specific and actionable suggestion will be appreciated.
Regulation in isolation is not possible
There is a tendency among market participants that everybody should not be treated in a uniform manner. They say just because of a few wrongdoers; the entire industry should not be suffered. But implementation of regulation in isolation is not possible.
Bottomline: Any questionable business practice by any market participant will impact the entire industry.
Technology is the magic bullet
Power of technology should be utilized. Through technology, any industry can reduce costs, serve their customers better, do better compliance and have better control.
Bottomline: Leverage technology to grow business.
