Madhabi Puri Buch, chairperson of the Securities and Exchange Board of India (Sebi), said on Thursday said the compliance should ‘become a low hum in the background of every organisation’.
“It’s like breathing. We do not have to think about breathing,” said Buch at the Global Fintech Fest. This was Buch’s first public appearance after US short-seller Hindenburg Research’s conflict-of-interest allegations.
She highlighted the importance of better compliance, particularly in a social environment where there is an imbalance of power between large corporations and institutions and small investors as helps protect and foster trust in the small investors. In addition, she emphasised that fintechs should help companies put real time controls and compliances in place.
Talking about Sebi’s recent norms to bring fractional ownership platforms in real estate under the regulatory ambit through Small and Medium Real Estate Investment Trusts (SM REITs), Buch said that industry’s response towards regulations was overwhelmingly positive.
“They wanted to be regulated. They were operating in an unregulated environment and were suffering from the fact that investors did not have faith and trust in their products and services because they were unregulated,” Buch said.
Buch also said that the regulator is working on over a dozen projects using artificial intelligence (AI), half of which are aimed at speeding up approval processes.
Citing an example of the same, Buch said, “We have received around 6,000 responses to our F&O consultation paper. Imagine if we had tried to do this manually; we would have died!”
Sebi had floated a draft paper in July, laying down seven steps to curb the extensive speculation in the derivatives segment. Sebi is expected to come out with the final directive in September.
Puri Buch said that the regulator has been a supporter of innovation in fintech to help create standards and infrastructure for speeding up the initial public offering (IPO) process, which can be seen through the decreased ageing of applications for IPOs. The regulator has been facilitating easier compliance to facilitate business. “If compliances are tangled, business is hard,” she said.
However, she clarified that regulatory actions against a business depend on whether the business is benefiting investors or if it is something that is not in the investors’ interest.
“If you are doing something that enhances the well-being of a consumer nine out of 10 times, the regulator will say yes. It will put some restrictions and monitor compliance, but it will say yes. But when the innovation treads the line where the investor is being shortchanged; there is opacity; there is lack of concern of what is happening to investor’s money, those with reasonable probabilities, the regulator will say no,” she said.
When asked about the allegations of made by Hindenburg Research in the sidelines of the event, Buch declined to comment.
The US-based short-seller Hindenburg Research alleged earlier this month that Sebi was unwilling to act on its January 2023 Adani report because Buch and her husband Dhaval Buch had investments in offshore funds that had links with the Adani Group. The Sebi chief and her husband, in a 15-point rebuttal, had denied the allegations, terming them “malicious” and an attempt of “character assassination”.
