SEBI Chairperson Tuhin Kanta Pandey defended the regulator’s powers on Wednesday in Mumbai. Addressing concerns about market accountability, he said, “This regulatory systems have been designed... in order to serve a certain purpose of the market because of the need to respond very very quickly.” SEBI also plans to delist shell companies.
SEBI Chairperson Tuhin Kanta Pandey underlined the need for speed in preserving market accountability amid criticisms of concentration of power with the market regulator against the backdrop of the Securities Markets Code (SMC).
Speaking at a media event at Mumbai on Wednesday, he responded to queries on what was SEBI’s stand with respect to SMC’s provisions that capped SEBI’s ability to spend money from its general fund. While declining to take a stand on it, Pandey said that SEBI had submitted its responses to the Parliament.
Separation of powers
Further he commented on the criticism that SEBI was in contravention of separation of powers, which is a basic structure of the constitution, by being both making rules, administering them and penalising violators.
“This regulatory systems have been designed, and not only in India but also in different parts of the world in order to serve a certain purpose of the market because of the need to respond very very quickly,” he said. He added that the separation of powers were already followed by SEBI and that the SMC recognised that. “The investigation side and the officers who are involved with the investigation, they do not decide the quasi judicial function,” Pandey said.
He responded to other queries of liquidity in markets, derivatives regulations and self-listing of exchanges. On exchanges listing on their own platforms, he said that they operated as regulators at some level and self-listing would conflict with its role as a regulator.
To delist shell cos
He expressed SEBI’s intent to delist shell companies in the small and mid cap categories and overhaul the SME IPO framework to improve liquidity of small stocks.
On regulating Futures and Options (F&O), he said that SEBI did not want to be “paternalistic” and telling people what to do and what not to do.
Asked if exchanges that were shut like the Kolkata Stock Exchange can be revived, Pandey said that while regulation does not preclose that there cannot be new exchanges, liquidity, business plan and feasibility of such an exchange is imperative. In the era of electronic trading, people can operate from anywhere. “What is that model, like business model, where you have to be physically proximate to some other place as an exchange? So I think they have to look into that feasibility and flexibility,” he said.