‘Fit and proper’ fine-tuned

SEBI'S PROPOSAL IS COMMENDABLE FOR SEEKING TO BALANCE REGULATORY RIGOUR WITH PROCEDURAL FAIRNESS

- SANDEEP PAREKH

THE SECURITIES MARKET operates on public funds and is exposed to systemic risk. Regulators therefore apply a “fit and proper” criterion to assess integrity, competence, reputation, and financial soundness before granting market access. This protects investors and sustains market trust and stability. The Securities and Exchange Board of India (Sebi), through a consultation paper, proposed amendments to the “fit and proper” framework under the Sebi (Intermediaries) Regulations, 2008, reflecting a nuanced attempt to contemporise regulatory standards.

At the heart of Sebi’s proposals is a selective relaxation of certain automatic, rule-based triggers for disqualification in favour of greater reliance on the existing principle-based criteria under the Intermediaries Regulations that aligns more closely with global norms and jurisprudential fairness. This recalibration is not merely semantic. It signals a subtle but important maturing of regulatory philosophy, one that recognises that the presumption of innocence and proportionality are essential to sustaining confidence in India’s capital markets.