The change was stark and important. There was a clearly laid out course wherein the regulatory framework to be headed. There was a recognition of the significance of market individuals’ 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 primarily based and never meant to be restrictive. For any product or transaction throughout main or secondary markets, there could possibly be extra necessities to make enough disclosures, however the intent is not going to be to cease issues. She was emphatic that as a rustic we’re not a “nanny state” that may prescribe what folks ought to do.
The opposite hanging side of her speech was about following a consultative strategy. She invited strategies from market gamers, individuals, practitioners, and trade associations. The interdependence of the regulator and the market individuals could possibly be discerned by the acknowledgement that markets are working and dealing robustly solely due to its individuals. Whereas it is vital for market individuals to work with the regulators and throughout the rules, there was additionally a dedication by regulators to search out options to the problems confronted by the individuals 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 growth and to recommend enhancements.
Whereas the Chairperson welcomed sensible strategies from the market individuals and trade our bodies, there was an unequivocal stress on making particular advice backed by concrete information to justify the identical. Apparently, a normal comment or an anecdotal case is unlikely to be entertained. However there’s an absolute openness to receiving sensible strategies for enchancment in the event that they had 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 normal foyer are gone.
She very lucidly defined the logic and assemble of the regulatory framework which shall be a mixture of precept primarily based, and regulation primarily based. Whereas there was a well-founded debate on principle-based v/s regulation-based strategy I’d agree that given our present authorized assemble, shifting to a very principle-based strategy could also be troublesome. A proper mixture of each, which is backed by information and information could possibly be an applicable methodology in the interim. Could also be as our market grows and matures additional, leaning in direction of principle-based strategy with the modernisation of the surveillance system could possibly be the fitting mixture.
On the identical time, it was clear {that a} disclosure-based framework or a mixture of precept and regulation-based framework, is not going to dilute the necessity for compliance. There could be no compromise on compliance or orderly operating of the market and violations shall 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 growing the market, is definitely distinctive. Right this moment, we frequently consult with international requirements on coverage issues. With the refreshing perspective we witnessed on the convention, the day is probably not far when our regulators shall be setting a world customary that’s made in India.
