SEBI is coming out with new regulations frequently
I agree this is the year of reforms. We are not unnecessarily tightening regulations. We believe in optimum regulation. Our reforms have kept in mind ease of doing business, ease of investment, investment protection and empowerment. We have done things to strengthen the regulatory framework. We have revised the regulatory framework for angel investors, and the disclosures and information to be provided by InvITs and REITs. We have restored trust in the regulator. We are doing everything in an open and transparent manner.
Many regulations seem to be aimed at micro-management?
That perception is incorrect. We are in fact trying to bring reforms to make it simpler for investors. We have done away with multiple KYC requirements which prevailed earlier. One KYC is all that investors have to do. It will be captured on a platform which can be accessed by all. We have done away with overlapping penalties. We are building confidence in the regulator. We have also undertaken reforms aimed at investor protection, be it in transfer of shares, exit loads, or ensuring that mutual funds come out with schemes which are true to the label. We have said thematic schemes should not have overlap. We have replaced solution-based schemes with life-cycle schemes. We have strengthened the equity derivatives market. We have also given adequate time to mutual funds to merge schemes where necessary.
Every SEBI chief comes around and tries to bring in new regulations and new rules. Unfortunately, they have a limited time period to execute everything. What is your vision?
I agree everyone tries to do something good in building the institution. Each one of us lays a brick to give shape to the institution. The regulator’s new charter deals with investor protection, regulating entities, and broadening markets and product innovation. We do not make ad hoc regulations. We do have a five-year plan and work accordingly. Among the goals is to build a good market for retail participation in debt instruments. We also have a road map for ensuring capital investments flow seamlessly, exchanges and depositories function smoothly, and to bring in greater efficiencies.
What about AI usage in online, real-time surveillance? With co-location, high-frequency trading and machine-dominated trades, how will you stay a step ahead?
We will be investing in AI in a big way too. Regulators, including stock exchanges, will also have to be future-ready and build capabilities. We may not have the necessary skillsets in-house and may have to hire fresh talent, as I said earlier. Regulators should necessarily be one step ahead and anticipate irregular trades. AI applications can also be used for investor awareness. We will be using home-grown AI applications which can reach out in multiple languages to a wide base of investors.
Insider trading and front running have been going on for decades. Do you think investigating institutional brokers, as was recently reported, will end the menace?
We have to book errant persons who facilitate such trades, both unfair trade practices and front running. We have to fine them and prosecute them to stop the practices and also to deter others from following in their footsteps. We have better tools to examine such trades, observe patterns and take action accordingly. Earlier this year we also had a few cases filed. We do our best to track errant brokers. I am sure our investigations will yield more and more results. The aim is to make the marketplace a safe area for investors.
It is said that SEBI orders are often overruled by SAT. Is it due to lack of evidence or improper investigations during the preliminary stage? What can be done to overcome it?
Sometimes it does happen that SAT may overrule. However, if you were to check the records during the last one year, we have an 80 per cent success rate, meaning our orders stand. SAT is also overburdened with work, as is SEBI. Sometimes it takes a lot of time both for SEBI and SAT. More benches being set up to look into the orders will certainly help.