Random thoughts of a regulator

When the Chairman of the Securities and Exchange Board of India (Sebi) writes a book on the securities market, one expects, at the very least, to find a reasoned, cogent and in-depth discussion of the issues animating the market.

We may expect a debate on the pros and cons of various policy alternatives. Or we could expect insights into how policy making is done within Sebi.

On an altogether different level, we might look for anecdotes and stories that help flesh out and render human the often all-too-cerebral, dry-as-dust processes of regulatory policy. Unfortunately, Bajpai's book fails to deliver on every one of these expectations. Instead of the gourmet fare that we anticipated, what we get is khichdi.

It's khichdi for more than one reason. The first and foremost one is the shoddy quality of the editing. What are we to make, for instance, of this piece of prose: "The millions of Indians, struggling for a square meal a day, are bewailing economic compassion."

How does one "bewail economic compassion"? What should one do with the exhortation to "identify the weak links in the chain and dent them with determination". Will denting weak links make them weaker or stronger?

Apart from such glaring editorial lapses, there's also much vacuous, cliche-ridden meandering.

A case in point is this description of the policy challenges facing insurance companies: "Developing sensible approaches, not only for co-existence, but also for flowering of multiple channels for sagacious and pragmatic propositions in product formulation, compensation structure, market segmentation ..." and so on and so forth.

What's more, it doesn't help that this book about the capital markets has a long chapter on the insurance industry in it, solely because the author happened to be the chairman of the Life Insurance Corporation of India before becoming chaiman of Sebi.

Also, while the first part of the book is "all about dynamising regulation in the securities market ethos", the second part is very different, with Bajpai waxing eloquent on the Gita and "Indian religio-philosophy".

Presumably, while Part 1 details the "Quest for new benchmarks in regulation", Part 2 deals with the "Quest for new benchmarks in human resources."

To savour the flavour of the second part of the book, here's an extended quote, "Like the planet Earth in the course of its diurnal and annual motions, man's life""which includes woman's life at any time""must be the balancing of two movements: one the gravitational pull of enlightened self-interest, and the other, for the greatest good of society, a luminous ideal comprehending the entire human world. Managers must remember not to let their managerial impudence present growth only for their own sake ..." and much more in that vein.

Part of the problem is that Bajpai merely skims across the surface of the issues. True, he does list the myriad changes that have taken place in the capital market, and he describes how the Indian stock market is now among the most efficient in the world.

But the problem is that all he does is touch upon the issues, devoting a paragraph or two to each. In short, it's unclear who Bajpai is writing for. His reader is unlikely to be the serious researcher, because there's not enough meat in these articles.

It's not likely to be the market participant, because he would have a far more in-depth knowledge of the issues than what this book offers. But the book will be useful for someone who wants a basic overview of the country's capital markets.

To be fair, Bajpai does lay out his thinking on the road ahead for the market. But all he does is list a series of points of action, without any elaboration.

However, where he does devote some space to the issue, as in the discussion of straight-through processing, he is lucid and informative. As a matter of fact, the editorial quality of the book is very uneven""while some chapters are well-written, others have all the defects mentioned above. It's almost as if the book has been written by several different people.

The trouble is that Bajpai tries to pack in too many things into one book. What is the point in writing about "India's new economic laws: WTO in context" in all of six and a half pages? Similarly, the chapters on venture capital and derivatives are extremely sketchy.

Instead of trying to do too many things, Bajpai would have done well to focus on one basic question""how is it that, despite all the improvements in the market, the share of financial savings of the household sector invested in securities has gone down? What are the things the regulator needs to do to change this situation?

Bajpai has built up a well-deserved reputation as an effective market regulator, and there is little doubt about his contribution to the development of the Indian capital market, to its transparent functioning, and to investor education.

He owes it to us to write another, better book on the markets. And this time, he should get it edited by a professional.

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The Securities Market

G N Bajpai
Global Business Press
Pages:157
Price: Rs 395