Change of guard at SEBI

As U.K Sinha takes the hot seat as the Chairman of the Securities Exchange Board of India (SEBI) some time next month, he will lead an institution that has earned not much popularity, but certainly a formidable reputation with market participants as a market regulator not to be trifled with. Mr Sinha will move from his current position as the Chairman and Managing Director of UTI Asset Management Company. SEBI, under its current Chairman,

C.B Bhave, has been on an overdrive in recent years, taking up and reviewing practically every securities law that has a bearing on investor protection in India. During his stint, SEBI has made the IPO and public issue process more transparent, tightened regulations on preferential allotments to promoters and levelled the playing field between retail and institutional investors in offers. SEBI's dramatic step of summarily banning upfront loads on mutual funds in 2009 and its run-ins with the insurance regulator on the issue of imposing similar norms on unit-linked products, may have attracted brickbats from the affected parties. But they certainly helped make these products far more investor-friendly and set the ball rolling on the reform of financial products distribution.

From here, the unfinished agenda for SEBI may lie in addressing a basic flaw in the Indian market structure – its extreme reliance on volatile FII flows and the lack of serious, long-term Indian investors who can provide the counterpoise to those flows. The regulator will also have to resolve the controversial issue of stock exchange ownership and take a call on the draft takeover code. However, Mr.Sinha may be up for this tough task, given his success at professionalising UTI and his earlier stint as Joint Secretary in the Department of Economic Affairs, Government of India.

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