A letter to the new chief of Sebi: Some issues that merit attention

Investor education and the market regulator's capacity for adjudication deserve to be high priority for Tuhin Kanta Pandey

- M. DAMODARAN

Dear Chairman Pandey, At the outset, let me wish you a rewarding and productive tenure as the head of India's securities market regulator. I would have personally preferred a 5-year term, with no re-employment or extension.

You assume office at a very critical time in the history of the organization. In terms of both products and processes, there have been significant achievements. At the same time, for reasons good or bad, the reputation of the organization has been somewhat dented. I am sure that with your experience in the area of finance, and perhaps in the arena of securities markets, you will hit the ground running with a plan to address urgent and important matters. It is not my intention to burden you with unsolicited advice. However, there are a few issues which are significant enough to merit your attention.

The first of these derives from the Preamble to the Securities and Exchange Board of India (Sebi) Act. The Preamble mentions development of markets, regulation of markets and the protection of the interests of investors. Some choose to read these as three different tasks that Sebi has to address. My own view is that both development and regulation are means to an end, which is protecting the interest of investors. I am cognizant of the fact that in addition to investors, there are two other 'I's, namely, issuers and intermediaries, that cannot be ignored. Primacy would, however, have to be accorded to the investor.