Markets to policy: 11 challenges for new Sebi chief Tuhin Kanta Pandey

The regulator's 11th chairman will have to balance the interest of investors and policy changes

Tuhin Kanta Pandey, the new chairman of the Securities and Exchange Board of India (Sebi), will take over from Madhabi Puri Buch, whose three-year tenure was marked by significant events. Pandey, a 1987-batch Indian Administrative Service (IAS) officer of the Odisha cadre, will face numerous challenges that will test his leadership and regulatory expertise. Here are the 11 key challenges ahead for Sebi’s 11th chairman.

 

Maintaining momentum: Pandey will have the hard task of deciding whether to continue or moderate the pace of regulatory changes implemented by his predecessor. Buch's sweeping changes, which transformed Sebi’s work culture to resemble that of the private sector, had both positive and negative consequences. On one hand, the reforms accelerated the pace of change, but on the other hand, they left many stakeholders dissatisfied

 

Stabilising market: With the market selloff accelerating, Pandey will need to prevent dislocations, safeguard all participants and maintain market stability and confidence in investors. He may have to revive the initial public offering market and implement confidence-boosting measures to support fundraising. Pandey must take steps to continue work to curb speculative derivatives trading and take action on the rising instances of SME manipulation to protect the interests of small investors.

 

Employee morale: The bureaucrat must address the concerns of employees facing various issues, including career growth and compensation and have accused Sebi’s leadership of “toxic work culture”. Regulatory insiders say that over the last few years, the attrition rate at Sebi has spiked, underscoring the employee dissatisfaction.

 

Managing all stakeholders: As Sebi chief, Pandey must balance the expectations of various stakeholders, including the government, companies and market participants. Sebi has faced criticism in the past for over-regulation and micro-management. To avoid this, Pandey will need to foster effective coordination with other regulators, such as the Reserve Bank of India and the Insurance Regulatory and Development Authority. He will have to manage the diverse expectations of stakeholders while maintaining Sebi's regulatory independence and effectiveness.

 

Consistency and regulatory assessment: Former Sebi top officials said Pandey will have to ensure that the recent regulatory decisions are assessed for the desired results and there is consistency in Sebi’s approach. Additionally, he will have to address the concerns on the frequency of changes in the regulations such as listing obligations and disclosure requirements.

 

Handling conflict and corporate rivalries: He'll need to manage the ongoing feud and competition between the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE), as well as other corporate disputes –such as the one seen at Religare Enterprises—to ensure there is no spillover.

 

Transparency in conflicting interests: During Buch's tenure, the issue of "conflict of interest" took centre stage. To avoid similar scrutiny, Pandey must declare all his investments, holdings, and potential conflicts at the outset. This transparency will help maintain the integrity of Sebi's decision-making process. He may also have to ensure adherence to the ‘code of conduct’ amongst other officials.

 

Adani controversy: With the final findings of Sebi’s investigation in the Adani matter, Pandey will have to navigate the controversy, ensuring Seb’s action in the matter brings transparency , revives trust and ensures a fair closure.

 

Ensuring innovation with balance: Pandey must ensure the success of newly launched products, such as small REITs, corporate bonds, and the new asset classes. His handline on proposed new products such as the mutual fund-insurance combo product will be keenly watched.

 

Leash on manipulators: Building on his predecessor's efforts, Pandey needs to further regulate finfluencers and prevent the spread of unauthorised stock tips. He must also leverage technology to prevent stock price manipulation by promoters and insiders, ensuring market integrity. He also needs to ensure that the SME platform isn’t misused.

 

Relaxation for the industry: The broking industry has undergone significant regulatory changes that threaten the survival of several smaller firms. While most of the measures are aimed at safeguarding investors’ funds and securities, Pandey will have to ensure that any policy changes are not disruptive for the industry.

 

By addressing these challenges, Pandey can ensure a smooth transition and uphold Sebi’s reputation as a robust and effective regulator. He joins at a time when navigating the regulatory landscape has become complex and the growth and stability of India's securities market has to be ensured.