The man who passed the Reliance order

Three months before he took over as Securities and Exchange Board of India (Sebi) whole-time member, G Mahalingam, then an executive director with the Reserve Bank of India, spoke at an event organised by the National Institute of Securities Market. 

“I am going to take exactly 20 minutes. I am not going to talk for more than 20 minutes. I need to hit the office by 1 o’clock,” he told his audience before starting. He kept his promise. “Today, in the field of financial markets, one cannot live without data. Data crunching is there in every field,” Mahalingam began his speech at the event which had on its agenda big data, market risk, regulatory policies and algorithmic trading.

Efficient use of data and a great sense of timing are two things that stand out in the Sebi whole-time member’s order in the matter of Reliance Petroleum last month. The order relied heavily on data about derivatives positions taken by the dozen agent entities of Reliance Industries and how these breached the client-wise position limits imposed by the exchanges. 

But, the rider he added in that speech must have come in handy. “Whatever data you have, you may do a lot of data crunching. Ultimately, the hard disk up above here is going to come to your rescue. The judgment call is the most important that any one of us need to exercise. The data will lead you through a path. The data will show you some options. Ultimately, selecting the right option is going to be the judgment call,” the 60-year-old trained statistician had said.

Another feature of his personality that comes across in his several speeches and public interactions, found on YouTube, is his sense of humour. He made fun of the analysts who said the bond market was rallying in expectation of the new governor and made light of the then governor, who famously asked people not to compare him with any bird — dove or hawk.

Beginning his career as a probationary officer, Mahalingam had a three-decade stint with the RBI, before moving to the Sebi. The long innings has also made him mature enough to take criticism lightly and constructively. “In RBI, we are used to criticism. If we are not criticised, we are surprised,” he had said once. 

Explaining how there was always somebody to criticise the central bank in all possible scenarios — raise rates, cut them, intervene in the forex market or not intervene — Mahalingam seemed to have mastered the art of squaring off one set of critics with the other.

In his only public speech reported so far, at an Assocham event on corporate bonds, Mahalingam spoke about retail participation and volume growth in the corporate bond market — a vexed issue discussed and deliberated in numerous such public panels without any significant progress. “As a retail investor, when I get into bonds I also think about liquidity. When I put money in banks’ fixed deposits, it is not merely for the interest rate that I get but it is also for the liquidity it gives me. That gives me a tremendous amount of comfort in addition to the return. Though the return is much less, I am satisfied because the liquidity is there,” he said.  “If same were to be the case with bonds, I am sure that it is going to be an important, tempting factor for the retail investor to come into the bonds space and that is where perhaps some amount of secondary market liquidity is needed.”

With a rare five-year term, Mahalingam now looks after foreign portfolio investors, collective investment schemes, surveillance, legal affairs and human resources. Some of those responsibilities may get shuffled as new members join and old leave, but the man who passed the Reliance order will remain a man to keep a close eye on and lend a keen ear to in the coming days.