23 March 2015

Sebi's long journey in a short time

I have a short comment piece in today's Business Standard on how SEBI has come a long way - and of course areas where it needs to work on further. The full piece is linked here and copied below:

It's been a long journey in a short time for Sebi (Securities and Exchange Borad of India). To the older readers of this piece, a settlement of shares and funds after a trade to purchase and sell had been closed, if it were to exceed 60 days, would not be surprising. There was paper floating then, some real, some duplicate, theft and postal delays of several weeks, rejection based on incorrect cancellation of revenue stamps. This and a hundred other problems of delay, rejection, fraud and intervention by unscrupulous brokers resulted in a game of snakes and ladders for investors.

Today's investor would instead be surprised if the entire process did not complete fully within two days of the trade. Virtually any case of fraud or intermediary mischief in the market system is dealt with not only from a viewpoint of investigation and punishment, but also in terms of completing the exchange of securities and funds, with an institutional guarantee of performance within the two-day window. Most of the efforts have been towards automation on the one hand and swift and harsh punishment for wrongdoing on the other hand. While the exchange markets have been a great success, other areas of the market have also benefited from Sebi's oversight. Sebi has indeed proved a regulator both feared and respected in equal measure. It still needs to work on improving the speed of its investigation, adjudication process and sometimes passing preventive orders too swiftly - orders which can punish in fact if not in law, before a finding of guilt.

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