Sebi Chairman Outlines Strategy to Enhance India's Market Competitiveness
The Securities and Exchange Board of India (Sebi) is embarking on a strategic initiative to sharpen India's global competitiveness by focusing on two critical areas: reducing the cost of capital and lightening regulatory compliance burdens. This announcement was made by Sebi Chairman Tuhin Kanta Pandey during his address at the sixth Annual International Research Conference hosted by the National Institute of Securities Markets on Thursday.
Focus on Cost Efficiency and Regulatory Streamlining
"The cost of capital is an important cost and it should come down," Pandey stated emphatically. He elaborated that efficiency, particularly cost efficiency across all regulatory measures, is paramount for building a competitive market environment. "If you have to build competitiveness and there is a compliance burden on regulation which is too high in terms of cost and time, then obviously to that extent the competitiveness also goes down," he explained. This dual approach aims to create a more favorable ecosystem for businesses and investors, potentially attracting greater capital inflows and fostering economic growth.
Addressing Recent Depository System Glitches
In his remarks, Chairman Pandey also addressed the recent settlement disruption that affected India's two depositories, specifically highlighting issues at the National Securities Depository Ltd (NSDL). This glitch, reported by Mint on February 4, led to delays in crediting shares or funds to several investors who had initiated trades.
"First of all, I would compliment the entire ecosystem, which includes exchanges, depositories, clearing corporations and also the broking community, which provided day-and-night support to their clients," Pandey acknowledged, praising the collaborative efforts during the incident.
He assured that a comprehensive root-cause analysis has been conducted, and necessary actions are being implemented across short-term, medium-term, and long-term horizons. "After the root-cause analysis, a detailed thing is done and whatever necessary action needs to be taken short term, medium term, long term, that is done," he said. These measures may include directives to vendors to strengthen systems or overhaul legacy software, which Pandey noted can develop glitches due to the expanding nature of the market. "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, emphasizing the need for technological resilience.
Establishing a Regulatory Impact Assessment Framework
To systematically evaluate and optimize regulatory measures, Sebi has established a committee dedicated to regulatory impact assessment. This initiative includes creating a separate vertical under its economic and policy analysis wing. The NISM Centre for Regulatory Studies will spearhead the examination of this issue, with guidance from an external experts advisory committee chaired by Chief Economic Advisor V. Anantha Nageswaran, who 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," Pandey stated, highlighting the importance of tailoring approaches to India's unique market dynamics while learning from global best practices.
This move underscores Sebi's commitment to evidence-based policymaking, ensuring that regulations are not only effective but also cost-efficient and conducive to market growth. By integrating these assessments, Sebi aims to strike a balance between robust oversight and minimizing unnecessary burdens on market participants.
