Investor Protection as the Primary Goal
- SEBI’s Preamble outlines three objectives: market development, regulation, and investor protection. However, investor protection should take precedence.
- Small investors’ participation is crucial for market stability, and their education must be prioritized.
- Investor education has been underfunded, with only ₹2.8 crore allocated in 2023-24.
- The National Institute of Securities Markets (NISM) was originally meant to have a dedicated School for Investor Education, but its focus has shifted towards training SEBI officials and intermediaries.
Expanding Investment Advisory Services Nationwide
- India lacks a strong network of trained and ethical investment advisors, particularly in rural areas.
- The SMARTS program, aimed at training advisors, needs more momentum to replace product pushers.
Improving Quality of SEBI’s Adjudication Orders
- Adjudicating Officers (AOs) often lack judicial training, leading to weak orders that get overturned at the Securities Appellate Tribunal (SAT).
- Some officers are appointed as AOs due to underperformance elsewhere—this must change.
- SEBI should consider judicial officers on deputation for better enforcement.
Speeding Up Enforcement Actions
- Surveillance, investigation, and enforcement take years, allowing market manipulators to profit unjustly.
- SEBI must focus on speed and exemplary punishment to deter wrongdoers.
Ensuring Regulatory Stability & Market Orderliness
- Conflict of interest and asymmetry of information remain major risks in the securities market.
- Frequent amendments to Insider Trading Regulations and Related Party Transaction norms create instability. Regulatory clarity and consistency are key.
Rethinking the ‘Independent Director’ Definition
- The definition of ‘Independent Directors’ should not be frequently changed.
- Independence is a state of mind and cannot be legislated or overregulated.
The new SEBI Chief is encouraged to lead with decisiveness, balancing regulation with market growth. The letter expresses good wishes and high expectations for a productive tenure.
