Will Sebi Chief Madhabi Puri Buch stay or go? A legacy in question

Trailblazing & troubled: Hers has been a tenure defined by reforms, rocked by allegations

The three-year tenure of Madhabi Puri Buch, the first woman chairperson of the Securities and Exchange Board of India (Sebi), is set to conclude in a few days. Her predecessors, Ajay Tyagi and U K Sinha, each served for over five years, thanks to extensions in their tenures. Traditionally, an extension after an initial three-year term has been the norm.

 

However, Puri Buch’s situation is more complex.

 

While Puri Buch’s track record in market oversight and regulatory reforms has been exemplary, the controversy surrounding ‘conflict of interest’ — first raised by the now-defunct Hindenburg Research and subsequently by the Opposition Congress — overshadows her achievements.

 

Although an extension is not entirely ruled out, the government invited applications for the Sebi chairperson’s post, with the last day for submissions being February 17. Reports indicate that the Centre has received over a dozen applications, with a few top bureaucrats being considered for the role.

 

As the government faces the challenging decision of whether to allow Puri Buch to continue or appoint a new chairperson at a time when the market is in correction mode amid a sharp selloff by overseas funds, a look at the former investment banker’s track record:

 

Market boom

 

Puri Buch’s tenure was marked by an appreciable market boom. In 2024, capital raised via initial public offerings (IPOs) reached ₹1.6 trillion, a record high not only for India but also one of the highest globally.

 

India’s market capitalisation crossed the $5.5 trillion mark, with stock markets hitting all-time highs in September 2024, marking a gain of over 3x after the Covid-19 pandemic. The number of dematerialised accounts has neared 200 million, the mutual fund (MF) asset base has approached ₹70 trillion, and equity participation has spread across the country.

 

Pushing through difficult reforms

 

Puri Buch’s deep understanding of the stock market ecosystem enabled her to push through challenging reforms. These include shortening the trade settlement cycle from T+2 to T+1 and introducing same-day settlement of trades, currently in pilot phase.

 

Under her leadership, Sebi also halved the IPO settlement cycle from six days to three and pursued aggressive changes in stockbroking, including ring-fencing client funds and securities from brokers, tightening derivatives trading rules, and streamlining fee structures.

 

Collaborative approach

 

Puri Buch’s collaborative approach to reforms brought all stakeholders together. She established several industry standards fora and floated 180 discussion papers on various areas, including disclosure norms for listed companies and foreign portfolio investors, stringent measures for small and medium enterprises listings, cybersecurity, environmental, social, and governance disclosures, and more.

 

She also launched initiatives such as a common related-party transaction analysis platform and a unified portal to track MF investments.

 

Use of technology

 

As a technology enthusiast, Puri Buch focused on cybersecurity and integrated technology for faster processing of IPO applications and registrations of market intermediaries. Sebi’s recent orders on insider trading and front-running showcase the effective use of technology in monitoring. The regulator also introduced norms for accountability in the use of artificial intelligence tools and stricter checks on algorithmic trading by retail investors.

 

Controversies & challenges

 

Over a year after Sebi initiated a probe into the Adani-Hindenburg matter, the US short seller levelled serious allegations of conflict of interest and violations of the code of conduct in relation to the advisory firms owned by Puri Buch and her husband, Dhaval Buch. The political Opposition, Congress, made corruption allegations, scrutinising Puri Buch’s private investments, employee stock ownership from her previous employer, and Dhaval’s association with Blackstone. Despite the couple’s rebuttal, the Public Accounts Committee summoned Puri Buch, though the session had to be adjourned due to her absence.

 

Employee unrest

 

Amid political unrest, hundreds of Sebi employees complained of a “toxic work culture” to the finance ministry and protested against Puri Buch’s leadership. While Sebi initially refuted these concerns, it had to retract its statement following widespread protests and committed to addressing the matter internally.

 

Unfinished business

 

While Sebi successfully implemented several proposals under her leadership, a few faced criticism for overreach. The proposed Sebi (Prohibition of Unexplained Suspicious Trading Activities in the Securities Market) Regulations faced backlash, and plans for instantaneous settlement have been pushed indefinitely. An overhaul of expenses for investors in MFs remains pending, and recent discussions on a combination product of MFs and insurance, as well as measures to curb grey market trading, will also remain unfinished.