Securities and Exchange Board of India (Sebi) chairman Tuhin Kanta Pandey has highlighted the critical need for banks to strengthen their controls and safeguards around price-sensitive information. This call comes in the wake of regulatory concerns following an insider trading case involving a Central Electricity Regulatory Commission (CERC) official and trades in Indian Energy Exchange Ltd (IEX) shares.
Regulatory Priorities and Market Challenges
As Pandey approaches his first year in office in March, he reflects on the priorities for the regulator and the markets it oversees. "The circumstances are not very different from what they were the year before because I think there is a continued level of instability in the world," Pandey stated. He noted that while India faces headwinds from abroad, the country has managed them reasonably well, with hopes for improvement despite potential risks from developments in the Middle East.
Pandey emphasized the importance of clarity and simplicity in market regulation, looking ahead to the next 20 years. "We need to really think about how we are going to see our capital markets and enable it," he said, pointing to the need for substantial growth in the markets. This requires enhanced enablement, constant improvement in surveillance methods, and balancing the roles of market development and investor protection.
Insider Trading Concerns and Preventive Measures
Addressing insider trading, particularly in the context of banks, Pandey mentioned recent reports about Sebi investigating insider trading in Yes Bank shares before its 2022 stock offering. While he refrained from commenting on specific cases, he stressed the preventive measures taken by the regulator. "We did a little bit of a preventive job there in terms of really saying that how banks as fiduciaries, they hold information," he explained.
Banks often hold price-sensitive information not only for their own stocks but also from other companies, making it crucial to guard such data. Pandey highlighted the importance of internal systems to control access to information, ensuring it is not readily available where leaks could occur. Sebi has conducted multiple workshops with banks, including a significant meeting in Delhi involving all regulators, to address these issues.
Focus on Influencers and Market Trust
Pandey also addressed the rise of influencers and individuals discussing the stock market on social media, sometimes crossing boundaries. "I think this is going to be a very major area for us," he said, emphasizing that trust is fundamental to market growth. He pointed out the need for investors to feel heard and for action to be taken on their concerns, while also understanding the risks involved.
Looking forward, Pandey underscored the importance of capacity-building in corporate governance and the regulator's role in fostering a trustworthy market environment. "We will be a growing organization and we will be rapidly growing, consistent with the needs of our capital markets," he concluded, highlighting Sebi's commitment to adapting to evolving challenges.
