MUMBAI: The Securities and Exchange Board (Sebi) will work towards reducing the cost of capital and lighten regulatory burden to sharpen the country’s competitiveness, chairman Tuhin Kanta Pandey has said.
“The cost of capital is an important cost and it should come down and so should the cost of regulatory compliance,” Pandey said at the sixth annual international research conference hosted by the Sebi-run National Institute of Securities Markets near here Thursday.
“Similarly, cost efficiency of all our measures is also important because if you have to build competitiveness there is a regulatory compliance burden which if it is too high in terms of cost and time, then obviously to that extent the competitiveness also goes down,” he added.
Addressing last week’s settlement disruption between the two depositories -- CSDL and NSDL -- the chairman said vendors may be asked to strengthen their systems or rework legacy software.
“First of all, I would compliment the entire ecosystem, which includes the exchanges, depositories, clearing corporations and also the broking community, which provide day-and-night support to their clients,” he said, adding the depositories need to strengthen their systems so that the recent disruptions do not recur.
Last week a software glitch at the National Securities Depository (NSDL), which went public recently, affected the settlement process as a result of which several investors are yet to get their shares credited or funds credited.
"After a root-cause analysis, a detailed analysis is done and whatever necessary action needs to be taken in the short-term, medium-term, long-term, that is also done,” Pandey said, adding this could involve asking vendors to strengthen systems or rework legacy software.
Legacy software may sometimes have glitches because of the growing nature of the market, and these must be suitably identified and the software upgraded, he added.
Sebi has also set up a committee on regulatory impact assessment and created a separate vertical under its economic and policy analysis wing. The NISM Centre for Regulatory Studies will examine the issue, and will have external experts advisory committee chaired by the chief economic advisor V Anantha Nageswaran, which will help design the framework.
“There are regulatory impact assessments in other jurisdictions also. That will also be studied, the way it is being done elsewhere. But we need to have our own models and research in India,” the Sebi chief said.
Earlier addressing the same event, NR Bhanumurthy, director of the Madras School of Economics, also spoke on the need to have a financial access index and not just financial inclusion index that the RBI has developed some years back, saying access to finance is a better gauge of financialisation and formalisation of financial accesss.
“Financial inclusion is a necessary condition for access to formal credit but having access to finance is the sufficient condition for formal credit and thus financial inclusion, so having a financial access index is a better gauge of credit access,” Bhanumurthy said.