Speeding up reforms: Madhabi Puri Buch's first year as Sebi chief

As first woman at the helm of Sebi, Madhabi Puri Buch brought in a data-driven approach and made regulation more nimble

5 min read Last Updated : Feb 28 2023 | 10:28 PM IST

From overseeing India’s largest-ever public float to facing harsh criticism for not acting in the Adani affair, the first year in office for Madhabi Puri Buch as chairperson of Securities and Exchange Board of India (Sebi) has been anything but dull.

For Buch — who achieved many firsts by becoming the first woman to helm the country’s capital markets regulator — speed has been of essence. Having spent three years as a whole-time member, the youngest Sebi chief was able to hit the ground running since she moved into the corner office on March 1.

She began her role during a period of market instability caused by Russia’s invasion of Ukraine and as India prepared to launch its largest-ever initial public offering (IPO) from the Life Insurance Corporation (LIC) of India.

Since then, the 57-year-old has only stepped up pace.

In February alone, Sebi released 17 consultation papers in diverse areas such as governance, environmental, social, and corporate governance, and alternative investment funds (AIFs), underscoring her intention for the next set of market reforms.

Those who have worked with Buch vouch for her implementation skills, particularly in challenging areas. She has demonstrated the same in her first year — from making foreign portfolio investors (FPIs) chew the bitter pill on T+1 implementation to pushing hard reforms in the broking industry aimed at investor safety, even though it made brokers forgo crores in revenue.

Observers say the first non-Indian Administrative Service Sebi boss in nearly two decades has brought about a refreshing change at Sebi.

With laser-pointer presentations replacing boring speeches, data-enabled discussions cut through the red tape. She also introduced chief executive officer (CEO)-style key result areas (KRAs) for all Sebi departments for keeping a steady finger on the market’s pulse.

Industry players say Buch has been swift in decision-making, vocal on regulatory gaps, and enthusiastic in converging technology into the regulator’s investigations and processes.

Given her strong domain knowledge, by virtue of her experience in broking and investment banking, Buch has marshalled her troops, kept them on their toes, and pushed for crucial changes in areas such as IPO disclosures, offer for sale revamp, cybersecurity beef-up, and reforms for AIFs, real estate investment trusts, and corporate bond markets.

And Buch isn’t the one to rest on her laurels.

After implementing hard reforms like a shorter trade settlement cycle ahead of the US, she has trained her sights on reforming the payment mechanism for secondary market trades. While the primary objective behind this is to prevent the misuse of investor money, it will also make India’s capital market architecture one of the most sophisticated globally.

Buch has proposed strategic reforms on governance by doing away with the practice of permanent board seats, greater scrutiny of private deals between investors and listed firms, a reimagining of roles of mutual fund trustees, and placing more accountability on managing directors and CEOs — both at listed firms, as well as key market intermediaries.

Her first year, however, does have some polemics — from political to regulatory people.

While the speed of transition has been appreciated, there have been concerns raised by companies trying to keep pace with the changing regulations.

M Damodaran, former Sebi chairman and now head of a governance firm, in a recent summit had remarked that regulatory hyperactivity and excessive prescription pose a challenge.

More such comments were seen questioning the regulator’s silence when a US short-seller’s attack on Adani Group wiped out $150 billion of investor wealth.

Sebi has already begun the probe into the Adani matter and it doesn’t comment on its investigations, more so when they are at an early stage.

Sebi has also been criticised for providing several dispensations in the LIC IPO, including a lower dilution of just 3.5 per cent, against the regulatory requirement of 5 per cent.

Another challenge, which Buch herself has acknowledged, is the need for reviewing the investigative processes and laws with the advent of technology and communication channels like WhatsApp and Telegram. These comments can be seen amidst setbacks the regulator has seen before the Securities Appellate Tribunal (SAT) and Supreme Court in various cases. Sebi has also suffered setbacks before SAT in the high-profile National Stock Exchange colocation matter.

One more area for regulatory tightening remains the unsolicited stock recommendations and, in certain cases, manipulation by financial influencers. While board members have spoken at length on addressing this side of investor protection, there hasn’t been any significant change.

Further, the time taken on investigations, rising litigations, and slow development of bond markets have been other areas of worry. But these issues plagued her predecessors as well.