Sebi 2 0 madhabi buch takes charge of market regulator when it needs to adapt to big changes

Sebi 2 0 madhabi buch takes charge of market regulator when it needs to adapt to big changes

Madhabi Puri Buch yesterday took charge as the ninth chairperson of the capital market regulator Sebi after it got statutory status. What makes her unique is her rich financial market experience. So far, Sebi has been led largely by bureaucrats. On the cusp of its fourth decade, Sebi needs to reorient its priorities to a world that is very different from the one in which it got statutory status in 1992. The phase of building market infrastructure, taming brokers and setting up systems is over. The priority now is to make sure that all the regulated entities play by the rules.

Financial markets are complex and rapidly evolving on the heels of advances in communications technology. The criticality of data made market intermediaries among the early adopters of artificial intelligence. In this backdrop, one of the challenges Buch will have to deal with is upgrading the skills of Sebi staffers to meet the needs of a changing environment. Many of Sebi’s brighter and younger recruits don’t stay long enough. The regulator should consider lateral entry from finance firms, like many Western regulators do. One area that could do with sharper focus is Sebi’s investigation skills. The regulator is often pulled up by the Securities Appellate Tribunal for shoddy work or worse. For example, in December the regulator was rapped for sending a show cause notice 12 years after an alleged incident.

Sebi’s effort in dealing with NSE’s co-location problem made finance minister Nirmala Sitharaman remark that GoI is examining if the regulator took necessary punitive action. Separately, a tardy pace of investigations against prominent companies makes for poor optics. Buch was a whole-time member of Sebi between April 2017 and October 2021. The experience with both the regulator and financial market puts her in a position to look at ways in which Sebi can sharpen its focus both on technical and investigative skills.