Sebi mulls measures to cut regulatory costs, study market impact

Regulator is considering a centre for regulatory studies and an expert panel to assess compliance burden and cost impact across the market ecosystem

The Securities and Exchange Board of India (Sebi) is examining several measures to reduce regulatory costs across the market ecosystem, Chairman Tuhin Kanta Pandey said on Thursday.

 

These include setting up a centre for regulatory studies, a dedicated unit under its Department of Economic and Policy Analysis (DEPA), and an external expert committee to assess the impact of regulations.

 

“Cost of capital is an important cost and it should come down. For all productive sectors, the access to finance should be available—which includes not only availability but also the cost. Cost efficiency of all our measures is important. If you must build competitiveness, obviously if the compliance burden of regulation is too high in terms of cost and time—then to that extent the competitiveness also goes down,” Pandey said on the sidelines of the 6th NISM-Sebi Annual International Research Conference.

 

In January, the market regulator constituted a five-member External Experts Advisory Committee (EEAC) on thematic review of regulations, chaired by Chief Economic Adviser V Anantha Nageswaran. Other members include regulatory experts and former Sebi officials. The committee has been tasked with assessing regulations on efficiency, compliance burden, impact, and cost-benefit parameters.

 

Pandey said issues of simplification and cost-impact analysis have also been discussed at the Financial Stability and Development Council (FSDC) level.

 

“Through FSDC, the inter-regulatory coordination is set up. They are looking at various ways to collect data, push research and then throw up ideas on how we can improve the access and reduce the cost of finance in general. Different regulators are involved in that,” he said.

 

Sebi is also in discussions to provide a consolidated statement of financial assets in coordination with other regulators, covering areas such as pensions, the National Pension System (NPS), insurance and banking, Pandey added.

 

In his address, the Sebi chief underscored the need for India-specific research in behavioural finance, technology risks and governance frameworks.

 

“We need insights into how technology changes behaviour, incentives and outcomes. Innovation must be accompanied by understanding. Otherwise, speed can outpace safety,” he said.

 

He further cautioned against risks posed by artificial intelligence models, including feedback loops, opacity and the potential to amplify errors at scale.

 

“These are not theoretical concerns. They are real and growing. This is where research becomes indispensable. We need rigorous work on market microstructure in digital environments. We need studies on AI-driven risks,” Pandey said.