‘Regulator that makes rules in isolation doomed to fail’: Sebi chief

Sebi chief Madhabi Puri Buch (File photo)

MUMBAI: Sebi chief Madhabi Puri Buch on Thursday said the markets regulator will work together with the mutual fund industry to co-create rules. She said that Sebi was working to speed up approvals using AI. Puri Buch said that mutual funds were necessary for financial inclusion and wealth-creation, while speaking at industry body Amfi‘s event. She said that the industry should work towards a system that benefits shareholders.
“The markets are today so complex that any regulator who is arrogant enough to believe that they know and understand every nuance and can actually make sensible regulations in isolation are doomed to failure.So co-creation is not us being generous. It is about just being sensible and knowing that in today’s world of complexity, unless you co-create, you’re going to land up with terrible regulations,” she said.
Puri Buch said that for the regulator MFs were the vehicle for financial inclusion. “This is the Viksit Bharat we talk about, where the girl child is healthy, educated, has digital access and a smile. To get to that place, we as an industry have to make sure that every citizen of the country participates in this huge wealth creation that is happening in our country today,” said Puri Buch.

The Sebi chief also called upon mutual funds to take an activist role, asking them to leverage the stewardship code to represent retail investors in investee company meetings and boost their participation. She also stressed the need for the corporate bond market to experience growth similar to the equity segment.
In an oblique reference to allegations from Hindenburg Research and the Congress regarding conflicts of interest, Puri Buch said that when she spoke about REITs, there were allegations of conflicts of interest and indicated that talking about MFs could raise similar allegations given that her earlier employer, ICICI Bank, also had a mutual fund arm.
Puri Buch said that RBI approval for the AMC Repo Clearing (ARCL) could boost volumes, which has exceeded Rs 20,000-crore turnover in a month. ARCL is Sebi’s designated clearing corporation for repo transactions in corporate debt securities. However, ARCL is not classified as a qualified central counterparty (QCCP), restricting participation from banks and primary dealers.