Sebi chief assures of no systemic risk despite tariff-induced selloff

India’s securities market regulator is confident that the stock market can withstand the spike in volatility arising from US President Donald Trump’s trade war, with minimal risk to the system. 

“I think investors have no need to panic,” Tuhin Kanta Pandey, chairman of the Securities and Exchange Board of India, told Bloomberg in Mumbai on Tuesday. “Despite the volatility, we are not seeing abnormal pressure on margins as well as settlements.” 

 

Pandey — who took charge of Sebi last month — touted the country’s settlement system as “unique” where trade clearing houses of both the National Stock Exchange of India Ltd. and BSE Ltd. — the two largest bourses — can settle trades on each other’s stead without triggering a system-wide collapse if one of them fails. 

Moreover, since the securities are in the possession of the investors in a dematerialized format, and money from any transaction is directly debited or credited to their bank accounts, there’s little risk that broker defaults will trigger financial losses for clients, Pandey said. 

The India Volatility Index — also known as the fear index — reflects heightened anxiety. A gauge of 30-day ahead volatility for Indian stocks surged the most on record Monday, after having dropped 22% in the last two months. 

Yet, Indian equities have fared better than several other major markets since Trump announced aggressive levies on imports to the US. India’s NSE Nifty 50 Index is down about 2% since April 2 when the tariffs were first announced, compared with 9% for the MSCI Asia Pacific Index and 8% drop for the S&P 500. 

“I think the people are also learning to stay calm,” Pandey said. “We have much less risk in the Indian system and investors won’t lose money due to system failure.”