Mumbai: The role of the Securities and Exchange Board of India (Sebi) is to maintain a fine balance between regulating and developing markets, and protecting investor interest, a senior official said on Thursday.
“Our role is that of a trapeze artist walking on a thin rope and balancing the three ends or the trinity of development, regulation, and investor protection. Trust me it’s not an easy walk, we do it every day,” said Amarjeet Singh, whole-time member of Sebi, while addressing the Gatekeepers of Governance event here.
Of the 167 circulars issued by the Sebi between September 2022 and August 2023, 44% were related to development, 48% around investor protection and the remaining 8% on the extension of timelines, he said.
Singh’s comments come in the backdrop of a significant increase in corporate governance failures over the past few years.
He said Sebi constantly faces a wide variety of market participants with varying expectations, an evolving external environment, and constantly changing risks and behaviour of participants.
“Regulation should ideally be a vehicle for mitigating risks and not an obstacle,” he said.
According to Singh, when regulations are too descriptive or too cautious, they run the risk of facing undue costs and stifling innovation. However, lax regulations can put investors, businesses, and the economy at risk.
The Sebi official was referring to some of the key financial crises that disrupted the markets both at the global and domestic levels, occurring due to poor corporate governance standards. These include the 2008 Lehman crisis, the US dot com burst, and the Enron scandal.
“We had a fair share of negative corporate governance episodes, comprising a fraud of the private software company, the fall of one of the biggest infrastructure shadow banks, a private sector bank, a gems and jewellery company, a healthcare company… so that list goes on,” he said.
Singh said financial misconduct and fraud in the absence of adequate regulations have become a recurring pattern in the industry. The perception that markets will look after themselves does not work really well, he said.
“Exciting news! Mint is now on WhatsApp Channels 🚀 Subscribe today by clicking the link and stay updated with the latest financial insights!” Click here!
Download The Mint News App to get Daily Market Updates.
Updated: 02 Nov 2023, 06:32 PM IST