Way Forward

♤ Investor Protection and Market Integrity: Despite its young age, SEBI has done a good job in kepeing the faith in the sanctity of the markets. However, more work can be done on the difficult task of prevention of flow of confidential information, which is evidenced by price movements around earnings, other corporate announcements and front-running of block transactions.

♤ Independence and Accountability: A quasi-legislative and quasi-judicial entity needs independence to be able to do its job effectively. If selective interference from outside were to lead to selective absolution then the trust in the market functioning would break down. It might be best if the regulators reported twice a year to a Parliamentary committee like Humphrey-Hawkins in the US and in return they got full independence to do their job.

♤ Development of Markets: While India boasts a world-class equity market and increasingly important bank assets, its bond market has not kept up. The government bond market remains illiquid. The corporate bond market, in addition, remains restrictive to participants and largely arbitrage-driven.