In first address after Hindenburg, Sebi chair urges 'trust, compliance'

Madhabi Puri Buch, chairperson of the Securities and Exchange Board of India (Sebi), on Thursday called for better compliance from market infrastructure participants and industry players to “foster trust”.

 

Speaking at the Global Fintech Fest (GFF) in Mumbai, Puri Buch also advocated for greater technology adoption and low-cost innovation, which the regulator is also embracing. She added that the market regulator has received over 6,000 responses on its seven-point proposals to curb speculation in the futures and options of indices.

 

The Sebi Chair said the regulator is using technology to analyse public feedback and conduct extensive consultations. Members of the committee reviewing the norms have indicated that the regulator might bring the final circular on the matter before its board meeting scheduled for September. Sources said that the exchanges have submitted their feedback and are not in favour of two of the regulator’s proposals.

 

In her first public address since New York-based short seller Hindenburg Research questioned her objectivity in probing the Adani group for several violations, citing her alleged conflict of interest, the Sebi Chair steered clear of any comments on the matter.

 

Puri Buch declined to address the allegations or the questions surrounding her ownership in consultancy firms on the sidelines of the event.

 

The Sebi chairperson and her husband, Dhaval Buch, had earlier issued a statement refuting the allegations. Sebi also stated that she had made disclosures and related entities were included in her recusal list.

 

At GFF, Puri Buch said that in a social environment where there is an imbalance of power between large corporations and institutions and small investors, compliance helps protect the latter.

 

“Our ultimate objective is that for every entity we regulate, compliance should simply be a low hum in the background. It’s like breathing. I do not have to think about breathing,” she said.

 

Regarding recent norms bringing fractional ownership platforms in real estate under the regulatory ambit through small and medium real estate investment trusts (Reits), the Sebi chairperson noted that the industry had proactively sought regulation.

 

“They wanted to be regulated. They were operating in an unregulated environment and were suffering from the fact that investors did not have faith and trust in their products and services because it was unregulated,” she said.

 

Hindenburg has questioned Sebi’s recent regulatory developments on Reits, calling it a conflict of interest as Dhaval Buch is associated with Blackstone.

 

Puri Buch said that to encourage innovation in financial technology, the regulator’s role has been to create standards and infrastructure — including those to speed up the initial public offering (IPO) process, approvals for online bond platforms, and execution-only platforms for mutual funds.

 

The market regulator is also working on data benchmarking and standard application programming interfaces for exchanges and depositories.

 

She added that the watchdog has accepted around 70 per cent of the proposals made by 16 working groups formulated to ease business operations. While 20 per cent of the proposals are under review, 10 per cent were not accepted because they either contradicted the core principles of regulations or were inconsistent.

 

Puri Buch disclosed that the regulator is working on more than a dozen projects using artificial intelligence, half of which are aimed at speeding up the approval process.

 

The ageing of applications for IPOs has decreased, with the majority of draft documents being approved within three months.