Regret not seeing launch of Reit or InVIT in my tenure: U K Sinha

Snippets from Sebi Chief U K Sinha's last press conference

U K Sinha’s six-year long tenure as chairman of the Securities and Exchange Board of India (Sebi) ends later this week. Sinha held his last press conference in Mumbai on Monday, where he spoke on wide-ranging issues and his biggest regret. Edited excerpts:

On Sebi’s main focus 

Sebi’s main focus has been to maintain a fine balance between protecting the investor interests and developing the market. But if it comes to making a choice then the Sebi will take a call in protecting investors.

On regulations which need overhaul 

I would like my successor to look into it and set own priority.

On regret while leaving Sebi

One of the significant regrets has been that there was no launch of real estate investment trusts (REIT) or infrastructure investment trusts (InVIT) during my tenure. I was hoping that I will be able to see it. But I am sure that in less than two months from now, the first InVIT will be launched. The reason it has not been launched so far is not because of the Sebi but to do with other regulators. We are working with them.

On overhauling the algo framework

This is a difficult area. Sebi would not like to do anything that’s disruptive. We floated a discussion paper and got a lot of feedback. One common feedback we got was why was the Sebi trying to imitate what has happened in the rest of the world. Sebi should look at it based on its own data. A highly evolved team of technical experts is looking at trading data in India to find out possible ways in which the misuse of this can be solved. Meanwhile, the Sebi has been able to come out with minimal regulations on algo trading. We have a penalty system for high ‘order-to-trade’ ratio. We are reviewing whether that penalty should be enhanced further.

On NSE algo issue

Sebi got its own examination conducted and based on that has given certain directions. The majority of those directions have been implemented while some are yet to be implemented. Sebi is following up this matter with the concerned agency and matter will be taken to its logical conclusion.

On increasing transparency

Much before I joined the Sebi had good practices in places with regards to transparency. In the last six years, we have taken steps to take it forward in a big way. We have put in place structured mechanism of meeting various investors groups. We have created an International Advisory Board that has guided the Sebi well. Most of the major decisions have been discussed with them.

On misuse of social media platform

Sebi’s attempt has been to protect gullible investors from the misuse of the social media. We wanted to bring in a new set of regulation for this but the issue of curtailment of freedom of speech was raised.

Cleaning up of the market

The SME platform has been successful with the listing of over 200 companies. Around 19 regional stock exchanges have been shut down as there was no trading happening there and were prone to manipulation. We met with resistance as well as legal challenges and the Sebi was able to win all the cases. We have also delisted 345 companies and more than 2,000 companies were brought to the dissemination board.

On Budget proposal of levying LTCG

I think it is a good move but there is some more clarity that is required on this. From the Sebi’s point of view, the focus is to control unfair trade practices not to prevent tax evasion. It is the domain of some other agency. We are cooperating with all the central agencies to resolve the issue.

On consent mechanism

Earlier, there was ambiguity over the use of the consent mechanism — Will it be applicable to difficult cases or only for smaller cases? Now, what can be consented and what cannot be consented is clearly laid out. Compiled by Shrimi Choudhary