'SEBI isn't Here to Play Hero WE'RE HERE TO BUILD TRUST THROUGH LAWFUL REGULATION,'

In his first major interview since the explosive Jane Street scandal sent shockwaves through India's financial markets, SEBI Chairman TUHIN KANTA PANDEY sat down with BW Businessworld's Annurag Batra and Palak Shah to spell out the market regulator's pressing concerns, outline his vision for the Securities and Exchange Board of India (SEBI) and tackle questions about market manipulation, transparency and investor protection. The man at the helm of SEBI already has a reputation for integrity and a track record of steering landmark financial reforms. He now divulges his vision of SEBI's role in a rapidly evolving market, the challenges of regulating high-frequency trading (HFT), and his plans to restore trust in India's capital markets. Excerpts:

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Mr Pandey, congratulations on your new role as SEBI Chairman. There's a lot of hope pinned on you, especially after the Jane Street case, where SEBI issued an unprecedented interim order securing nearly $600 million in just ten days. Can you walk us through your reasoning for allowing Jane Street to resume trading despite such serious allegations of market manipulation?

The Securities and Exchange Board of India (SEBI) is an institution-driven organisation, and I'm a firm believer in collective strength and lawful action. The Jane Street case is an interim order, not a final judgment. Our legal framework, rooted in natural justice, requires us to issue a show-cause notice and hear the other side before imposing permanent penalties. We couldn't wait for the full investigation due to the egregious nature of the violations uncovered, so we issued an interim order, secured $597 million, and imposed strict conditions, including a ban on manipulative activities.

Jane Street hasn't traded in the futures and options (F&O) market since, and both SEBI and the exchanges are maintaining aggressive surveillance. This isn't about leniency - it's about balancing firmness with fairness while protecting the market.

But isn't this unprecedented? In SEBI's 35-year history, no order has allowed a party under investigation for manipulation to resume trading after depositing funds. Doesn't this set a risky precedent?