Concerns Over More Power for Sebi Chief to Handle Crisis

Letting regulator skip consultation may make rule-making less transparent, say experts

- Neha Joshi

A new framework that allows the market regulator's chief to bypass the consultation process before finalizing rules has drawn criticism, with the legal fraternity saying it could make the process less transparent.

Currently, the Securities and Exchange Board of India (Sebi) uses committees with diverse stakeholders to discuss proposed regulations, publish consultation papers for public comment and upload agenda papers (excluding confidential information) after board decisions. These practices, though voluntary, are now being codified into law.

The new Sebi (Procedure for making, amending and reviewing of regulations) Regulations released on 17 February will mandate a 21-day period for public feedback on proposed changes, except in emergencies. This exception in case of "emergencies" has evoked concerns.

The provision allows Sebi to expedite action in urgent cases, giving its chairperson the power to shorten or even waive the consultation or feedback period if it might delay critical market decisions. The Sebi board will, however, review if the reason for such fast-tracking is explained transparently.