The change was stark and important. There was a clearly laid out course during which the regulatory framework to be headed. There was a recognition of the significance of market contributors’ views and their points. There was concentrate on logic and information behind regulatory modifications. And there was an acknowledgement that the function of regulators goes past regulating, to nation constructing.
Delivering the inaugural handle, the chairperson, Sebi, clearly despatched out the message that Sebi’s rules are disclosure based mostly and never meant to be restrictive. For any product or transaction throughout major or secondary markets, there may very well be extra necessities to make enough disclosures, however the intent won’t be to cease issues. She was emphatic that as a rustic we’re not a “nanny state” that may prescribe what individuals ought to do.
The opposite putting side of her speech was about following a consultative method. She invited options from market gamers, contributors, practitioners, and trade associations. The interdependence of the regulator and the market contributors may very well be discerned by the acknowledgement that markets are working and dealing robustly solely due to its contributors. Whereas it is crucial for market contributors to work with the regulators and inside the rules, there was additionally a dedication by regulators to search out options to the problems confronted by the contributors for a correct development of the market. One notable transfer is {that a} devoted officer has been appointed in each division of Sebi who’s assigned the duty of market improvement and to recommend enhancements.
Whereas the Chairperson welcomed sensible options from the market contributors and trade our bodies, there was an unequivocal stress on making particular advice backed by concrete information to justify the identical. Apparently, a basic comment or an anecdotal case is unlikely to be entertained. However there’s an absolute openness to receiving sensible options for enchancment in the event that they have been supported by ample background work, logic, and information. To me, it meant two transformative and visual modifications – one, the regulators know their enterprise and two, the times of basic foyer are gone.
She very lucidly defined the logic and assemble of the regulatory framework which will likely be a mixture of precept based mostly, and regulation based mostly. Whereas there was a well-founded debate on principle-based v/s regulation-based method I’d agree that given our present authorized assemble, shifting to a totally principle-based method could also be troublesome. A proper mixture of each, which is backed by information and information may very well be an applicable technique in the intervening time. Could also be as our market grows and matures additional, leaning in direction of principle-based method with the modernisation of the surveillance system may very well be the proper mixture.
On the identical time, it was clear {that a} disclosure-based framework or a mixture of precept and regulation-based framework, won’t dilute the necessity for compliance. There could be no compromise on compliance or orderly working of the market and violations will likely be handled appropriately.
A regulator that’s cognizant of its function in nation constructing, is keen to have a constructive dialogue, is progressive and focussed on creating the market, is definitely distinctive. As we speak, we regularly discuss with world requirements on coverage issues. With the refreshing angle we witnessed on the convention, the day might not be far when our regulators will likely be setting a world normal that’s made in India.
