Markets regulator Sebi, which played coy long enough, seems to be exhibiting a can-do attitude going by last week’s board meeting. Of the 17 proposals on agenda, the board cleared 10. Be it allowing universal stock exchanges, and relaxing entry norms for Foreign Portfolio Investors but at the same time avoiding the controversial P-Notes, each is significant. In fact, in the past nine months under its new chairman, Ajay Tyagi, Sebi has made sweeping changes related to mutual funds and public issues.
Tyagi hit the ground running, going after big fish within a month after taking charge, banning Reliance Industries from equity derivatives market for a year, which Reliance is contesting. The speed at which Sebi is moving is just what the doctor ordered, but not uniform. For instance, during last week’s meeting, Sebi failed to decide on the contentious circular requiring listed firms to disclose debt defaults enabling transparency. The circular was issued in August, but was retracted just a day before it was to come into force on October 1. Sebi is convinced such prompt disclosures are crucial for investment decisions, but held it back, reportedly at the behest of the RBI and finance ministry as it could erode banks’ financial health.
Though the recent amendments to the Sebi Act gave it more regulatory teeth, a lot more is desirable. A case in point is the ongoing investigation into 12 companies, whose financial data was found circulating among WhatsApp groups for possible insider trading. Sebi conducted searches, but may face legal trouble as dealers are likely to move court for breach of privacy, which the apex court recently ruled as a fundamental right. Sebi’s ‘search and seize’ powers are limited to books, registers and other documents, and not an individual’s social media accounts. The securities watchdog should thoroughly amend laws to regulate and supervise the developing financial technology market. Else, all efforts to reform will remain a prayer without intent, which sounds something like: “Lord make me pure, but not yet.”