Sebi studies its own regulatory impact: Sinha

The new model involves a robust system taking care of most of the smaller offences so that the investigation resources are utilised effectively to tackle violations

Becoming the first financial sector regulator to study its own regulatory impact, Sebi has decided to adopt a risk-based supervision model for the securities market with sharper focus on bigger crimes.

The new model, put in place as per recommendations of an independent global consultant, involves a robust surveillance system taking care of most of the smaller offences so that the investigation resources are utilised more effectively to tackle serious violations, Sebi chief U K Sinha said.

"Most of the people know what Sebi (Securities and Exchange Board of India) does by way of its orders and regulations, but they may not know how Sebi is trying to improve its internal working.

"We would like to claim that we are the first financial sector regulator in the country who have done a survey of our own regulatory impact," Sinha told PTI in an interview.

Sebi had appointed Oliver Wyman, a well-known global consultant for studies in the areas of financial regulations that has been previously roped in by the regulators in the US and Europe, "to revisit the structural and organisational issues, re-prioritise areas of focus and to look at the technological and manpower needs of Sebi".

"We have implemented the recommendations of the consultant. The 2-3 things that they have highlighted and we have implemented are for example -- in matters of enforcement, the consultant have drawn our attention that you should first focus on supervision because as a regulator we have a right to inspect, we have a right to demand periodic returns.

"Then supervision should also be risk-based," Sinha said.

The Sebi chief further said that the consultant has suggested specific metrics to determine the risk that every firm poses to the system and based on which enforcement actions can also be initiated.

"I would also like to highlight that the consultant has asked us to focus our attention on supervision. One of the main things here is that, let us not waste our energy on small offences. We should concentrate on bigger offences.

"So by supervision what we means is we are trying to prevent smaller offences," he said.