Sebi's regulatory philosophy and reforms: Well begun is half done

Observers of India's securities market and its participants have reason to feel reassured by chairman Pandey's statements

- M. DAMODARAN

Winds of change are blowing across Sebi Bhawan, the home of India's securities market regulator. Expectation levels of market participants have run high, and the hope that there would be meaningful and pragmatic regulations, encouraging honest conduct of business, has been reinforced.

In his first week as the head of India's securities market regulator, Chairman Tuhin Kanta Pandey has sent the right signals and articulated the regulatory philosophy that will inform the functioning of the Securities and Exchange Board of India (Sebi) over the next few years. In his keynote address at a summit on 7 March 2025, he said, "All reforms need not be big-bang. Many a time, small reforms cumulatively are more effective. Going forward, Sebi will use a right mix of both to achieve the objectives."

The words 'going forward' are of significance. Sebi has been known, especially in the last few years, to do things that no regulator or jurisdiction has either attempted or considered worthwhile. The tendency to be the first to undertake a new initiative sometimes turns out to be disruptive, and with negative consequences. The commitment that a sledge-hammer approach would be a thing of the past should be music to the ears of those who conduct business with integrity, and have been at the receiving end of a plethora of regulations, giving rise to compliance challenges and costs.