Nullum est iam dictum quod non dictum est prius” (nothing is said now that hasn’t been said before). That is all that can be said about the “new initiatives” for 2011-12, presented by the Securities and Exchange Board of India (Sebi) to its board last month. By including everything, Sebi has not focused on anything. The initiatives have avowed goals like having a “special focus in 2011-12 on investor awareness and education, surveillance of markets and building HR capability”, “spreading financial literacy in schools”, “holding workshops for target groups”, demystifying securities markets, “developing and deepening markets”. One would have imagined that these hardly need a “special focus” in any one year. An organisation charged with the responsibility to ensure investor protection, market regulation and development is expected to be doing that in any case. It would have been helpful if Sebi’s new agenda included a meaningful analysis, evaluation and impact analysis of its policies and of its investor awareness programmes, before the board agreed to commit any more funds towards these programmes.
Surprisingly, at a time when many people are questioning the effectiveness of self-regulatory organisations (SROs), Sebi proposes to allocate funds for an SRO for a motley group of investment advisers. Will it work in practice? Sebi seems to be keen to develop a “risk-free” and a fair market. While it is perfectly understandable that Sebi wishes to create a “fair market”, it is not clear why it should seek a “risk- free” one. Nor has Sebi clarified what measures it would need to take to implement the policy on takeovers, the recommendations of the Bimal Jalan Committee report, an exit policy for the defunct stock exchanges, and to eliminate delays in the implementation of International Financial Reporting Standards and penal actions in key investigation cases.
It is not clear to what extent Sebi’s elaborate, sophisticated, powerful and expensive Inter-Market Surveillance System has helped sharpen its market surveillance capabilities. Yet, fresh funds have been committed towards the installation of software and platforms to install data warehousing, business intelligence systems and a unified filing and dissemination platform called Sebi Unified Platform for Electronic Reporting and Dissemination. These are all necessary to enhance Sebi’s regulatory efficiency and efficacy. But in the absence of strong internal teams at all levels to implement these sophisticated systems, the potential of these systems would remain largely unexploited, the resources will be wasted and the return on investment will be low. It appears from the 2011-12 initiatives, that “a fresh impetus is proposed to be given to the area of training and development” to develop such expertise. This should have been done much earlier. Yet, it is a welcome initiative.
High-sounding aims and laudable objectives make for an ambitious and impressive document, but such a document will remain an empty promise if the implementation is weak. Ordinary organisations led by ineffective boards suffer from such weaknesses. Great organisations led by great boards don’t. The Sebi board, which now has several new directors and a new chairman, must provide the required leadership and guidance to make its new vision a reality.