Sebi chairperson counters claims of overregulation, saying nearly half of Sebi’s recent circulars were focused on ease of doing business rather than compliance measures.
Securities and Exchange Board of India (Sebi)’s Chairperson, Madhabi Puri Buch, on Thursday, November 16, 2023, refuted the “common perception” that it has been over-regulating the market participants. Addressing the Capital Market Conference of the Federation of Indian Chambers of Commerce & Industry (FICCI), she said the perception stemmed from the market’s failure to see through Sebi’s lens. She added that the consultation papers led to the impression it is regulating more.
"There is a common perception that Sebi has been going into overdrive. In the last 12 months, Sebi has issued 167 circulars across various market participants, including exchanges, brokers, mutual funds, and listed companies. Of these, 43 per cent were aimed at facilitating ease of doing business or developmental." She explained that by developmental, she means leading the way for "launching of new products and services like online bond platforms or Execution only platforms, or a new service."
Additionally, SEBI focused on automation, simplifying compliance and disclosures, and alleviating companies' burdens by delegating these tasks to exchanges and depositories," she said.
Buch clarified that only half of Sebi's efforts, about 48 per cent, focused on risk mitigation and investor protection." Due to the focus on controversies, it is easy to miss that nearly half of Sebi's interventions aimed at improving ease of business rather than risk protection and greater compliance," Buch added.
Addressing concerns about the impact on listed companies, Buch noted that despite discussions about stringent requirements, the number of circulars issued for ongoing compliance has reduced. In the last 12 months, Sebi issued only four circulars, two of which aimed to improve the ease of business for listed companies. She further said this trend extended beyond listed companies and holds true for all market participants.
She said that between 2013 and 2015, the issuance of circulars stood at 66 annually, which has now risen to 160. But this surge is because the market has grown and complexity has increased proportionately. "While Sebi regulates 10 entities, our counterpart RBI oversees only 5 entities, yet have released 200 circulars, surpassing our count of 160," she said.
"So from our perspective, this is just part of the evolution of the market and not out of whack with what is going on around us," she added.
Further, Buch emphasised that consultations had risen to 33 per cent in the past year from 7 per cent in 2013, which led to the perception of increased regulation. "We thought market(s) are complex, and we should consult more. You are just getting the feeling that we are regulating more now because we are consulting more than (in) previous years."
Sebi recently introduced a new fee-collection mechanism for investment advisors and research analysts. This proposed system, aiming for centralised payment processing, received mixed reactions, with concerns about increased costs and procedural complexities. Sebi's proposed regulations for realty fractional ownership platforms also received similar responses.