Regulations must evolve for healthy markets

When disclosure rules are simple, enforcement is predictable, and new technology is welcomed, market participants feel more secure and willing to invest

- SHRIRAM SUBRAMANIAN

ANY ROBUST CAPITAL market is built on investor confidence, corporate transparency, and regulatory agility.

As financial instruments, investor profiles, and technologies evolve, the regulatory framework governing them must do so as well. Overly prescriptive rules stifle innovation and deter market participation. Flexible and adaptive regulations help market participants respond quickly to change. Regulations must keep pace with market innovations and global best practices to sustain a competitive capital markets ecosystem.

Recent steps by the Securities and Exchange Board of India (Sebi), the Reserve Bank of India (RBI), and the ministry of corporate affairs (MCA) reflect this shift. Sebi has introduced streamlined disclosure norms, eased fundraising rules for startups and real estate investment trusts/infrastructure investment trusts, and enabled faster settlement cycles to deepen market efficiency. The RBI, meanwhile, has focused on strengthening the regulatory framework for fintechs and non-bank lenders. Both Sebi and the RBI are encouraging innovation through mechanisms like regulatory sandboxes. These measures signal a coordinated move toward a more responsive and forward-looking regulatory environment. Our capital markets have moved to T+0 settlements. The RBI has introduced faster cheque processing that enables quicker payments, and enabled bank funding for mergers and acquisitions. At its last board meeting, Sebi announced a slew of positive changes: easing foreign portfolio investment disclosure norms, rights issue process simplified with tighter timelines, tweaks to shareholder disclosure norms, optional T+0 settlement, and extended timelines for algo trading.