On Friday, the Supreme Court of India had ordered the Securities Exchange Board of India (Sebi) to respond by Monday on the steps taken to safeguard the Indian investors in times of crises for instance market crash post the Hindenburg’s report on the Adani Group.
“It is said the total loss by Indian investors is several lakh crores. How do we ensure they are protected? It is said to be 10 trillion. How do we ensure that this does not happen in the future? What role should be envisaged for Sebi in the future,” asked a bench led by Chief Justice of India (CJI) DY Chandrachud and Justices P S Narasimha and J B Pardiwala.
“One of the suggestions is to have some committee. We do not want to cast any doubt on Sebi or the regulatory agencies. But the suggestion is to have a broader thought process so that some inputs can be obtained. And then the Government can take a call as to whether some modification is required of the statute, or whether a modification for the regulatory framework is required. Beyond a certain stage, we won’t enter into the policy domain, but there should be a mechanism that such a thing doesn’t happen in the future. This is the call that the government has to take.”
“We can give a wider role to Sebi and it can analyse powers that exist and how it can be improved since the capital flow will become more seamless,” it added.
“Today there is seamless capital flow. How do you ensure that investors are protected? Everybody is an investor now, small, medium, or big,” the CJI inquired on this to the Solicitor General Tushar Mehta, representing the Sebi.
“It is a little premature for me to immediately answer. The trigger point was the (Hindenburg) report, which was beyond our territorial jurisdiction. Some regulations deal with the concerns. We are also concerned,” Mehta said adding that the epicenter of this is beyond the jurisdiction of India while the SC affirmed protection and security over the market space.
“Give us a framework. This is just loud thinking. We are conscious that whatever we say may also affect the stock market. It runs largely on sentiments. So we are cautious”, the CJI said.
On the hindsight, the bench narrated the order, “We have indicated to the Solicitor General the concerns with regard to ensuring that the regulatory mechanisms within the country are duly strengthened to ensure that Indian investors are protected against certain volatility, the kind of which was witnessed in the recent two weeks. That, in turn, would require due assessment of existing regulatory framework and the need for strengthening regulatory framework in the interest of the investors and the stable operations of the securities market.”
