G N Bajpai, Chairman, Securities and Exchange Board of India
The Securities and Exchange Board of India (Sebi), the country's capital market regulator, has made rapid-fire moves ever since G N Bajpai took charge as the chairman in February last year.
In pursuit of his vision of making Sebi the most dynamic and respected regulator globally, a series of amendments have been brought about to the regulatory framework.
To mention a few, comprehensive changes have been made in the takeover code and a detailed code of conduct has been specified for listed companies with regard to insider trading regulations.
In April last year, T+3 settlement was introduced and the regulator is optimistic of introducing T+2 settlement in the current year. There have been efforts to improve disclosure practices as well. Bajpai answers diverse issues raised by The Smart Investor.
Sebi has been pretty active last year, implementing changes in various regulations. What is your focus this year?
Our focus this year will be to take a close look at the remaining regulations. Our objective is to review all regulations within a period of 12-18 months.
We would also like to take a fresh look at the powers that Parliament has given us recently. Also, the various developments in the market, which we are watching closely, will have to be absorbed into the regulations.
There is a general feeling that Sebi has been ineffective in fixing malpractices. Would you attribute this to a lack of adequate powers?
General powers have no meaning. Powers should be event-specific. In case there is an event which should be taken note of, the regulator must be able to act upon it. In that sense, we have enough powers.
The highest punishment that Sebi can impose is capital punishment. We can take away somebody's licence or debar somebody from entering the market. But these have not really worked well as a deterrent for others to abstain from similar misdeeds. What perhaps works well is monetary punishment.
Under the new powers, Sebi can impose a fine of Rs 25 crore, or three times the monetary gains arising out of an offence. The idea is to deprive the party of economic gains, which is the prime motive of any economic misconduct. Nevertheless, these are quasi judicial in nature.
In stock markets, we see massive price movements just prior to news on some stock, suggesting a likelihood of insider trading. Why hasn
