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As the market grows, we need greater governance norms to keep the faith and trust of investors: SEBI Chairman Ajay Tyagi

Sep 11, 2018


 

MUMBAI, 11 September 2018: Chairman, Securities and Exchange Board of India (SEBI), Mr. Ajay Tyagi today expressed great hope and optimism for Indian capital markets in the New India envisioned by the Government. He was speaking at the inaugural session of 15th CAPAM, the Annual Capital Market Conference organised in Mumbai by the Federation of Indian Chambers of Commerce and Industry (FICCI).

 

"Indian securities markets exhibited positive trend during 2017-18 with increased resource mobilization through issue of equity as compared to the previous financial year. And the current year promises even more action," he said in his inaugural address. This success could be attributed to stable macro‐economic fundamentals, political stability and the structural reforms that the present government has been endeavouring towards over the last couple of years. Backed by strong inflows and increased participation of retail investors, the Indian IPO market witnessed heightened activity in the previous year.

 

"Governance is of utmost importance. As the market grows, we need greater governance norms to keep the faith and trust of investors," Mr. Tyagi said. He added in order to improve the corporate governance framework, several recommendations of the Committee chaired by Uday Kotak have been implemented, such as enhanced role of the Nomination & Remuneration Committee, separation of the roles of Chairman and CEO, enhanced focus on Independent Directors etc. It is believed that these measures would further strengthen governance, leading to increased investor confidence, some of the mainstays of SEBI.

 

Market integrity and fair conduct are cornerstones of an efficient capital market. It is extremely important to prevent fraudulent and unfair trade. Chairman Sebi also informed the gathering that a view on the Report on Fair Market Conduct, submitted by the Committee chaired by Dr. T K Viswanathan, is to be formulated shortly.

 

Another key focus area is Cyber Security, which has gained huge significance in the last few years. Taking cognizance of this challenge, the Regulator plans to expand the scope for cyber security initiatives for market infrastructure institutions so as to reduce the element of uncertainty in the market.

 

Other important issues he flagged up were development of the corporate bond market, ease of doing business and deployment of data analytics and new generation technologies.

 

Mr. Rashesh Shah, President, FICCI and Chairman & CEO, Edelweiss Group observed that, "Indian capital markets have achieved a lot in the last 25 years and today are as good as anywhere in the world." He said that capital markets are now complementing the banking system. With the expansion of asset class which includes bond markets, currency futures and the commodities market, they are poised to become multi‐asset class.

 

To achieve the vision of capital market in New India 2022, he highlighted that we must have a credit market which is equally developed as the equity market. Decrease in intermediation cost is indispensable for this to happen. Mr. Shah also mentioned that due to increase in regulatory requirements, the strategy function of Boards has been subsumed in their enhanced compliance functions which affects the competitive edge of Indian businesses; stressing on the need to strike a balance between the need for higher reforms and the costs and efforts involved.

 

In his theme address, Mr. Sunil Sanghai, Chairman, FICCI Capital Markets Committee, emphasized some of the critical factors which would play an important role in the growth of capital markets in the next couple of years. These include facilitative regulatory framework, enhanced governance, availability of capital and a vibrant bond market to meet funding needs of the economy.

 

Ms Shilpa Kumar, Co‐Chair, FICCI Capital Markets Committee & MD and CEO, ICICI Securities Ltd. said that we are at an inflection point for transformative change and need to effectively balance capital management, risk and regulation for growth of the market.

 

Mr. Himanshu Kaji, Co‐Chair, FICCI Capital Markets Committee and Executive Director & Group COO, Edelweiss Financial Services Limited, presented concluding remarks at the inaugural session.

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