Chief Economic Advisor-led panel formed for regulatory impact assessment: SEBI Chairman

SEBI Chairman TK Pandey said on Thursday that a committee, led by the government's chief economic advisor, has been formed for regulatory impact assessment.

Chief Economic Advisor VA Nageswaran will be chairing the panel.

The SEBI chief was speaking at the annual International Research Conference on Securities Market in Mumbai, organised by the market regulator and the National Institute of Securities Markets (NISM) in collaboration with the Indian Institute of Management-Mumbai (IIM-Mumbai), the Maharashtra National Law University, and stock exchange NSE.

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SEBI will be launching a Centre for Regulatory Studies. This will be "a high-level" and "continuing centre" that will help with this research, said the SEBI chief.

He also said that the initiative would allow policy schools and research institutes to collaborate on understanding how regulations impact the market, as there is always an inherent cost to regulation.

Stating that the financial system is characterised by interconnectedness, Pandey said that these issues are discussed at the Financial Stability and Development Council (FSDC) level.

Here are highlights of what the SEBI chairman said:

• Data can support policy design, supervision and risk assessment when governed well and responsibly shared

• The objective of improving data accessibility is to boost high-quality research across the securities market ecosystem

• Market capitalisation has surged from approximately Rs 100 lakh crore in FY15 to over Rs 470 lakh crore

• This growth is mirrored in the mutual fund industry

• Mutual fund assets under management (AUMs) have risen from Rs 12 lakh crore in FY16 to Rs 81 lakh crore

• Unique investors have grown to 14 crore from 3.8 crore in 2019

• Technology now serves as the core architecture of these modern markets, with digital systems handling trading, clearing and settlement

• This advancement introduces new complexities and risks

• Innovation must be accompanied by understanding; otherwise, speed can outpace safety

• Artificial Intelligence (AI) and advanced analytics can strengthen surveillance and detect fraud

• Algorithmic markets can create feedback loops

• AI models can introduce opacity

• The future research agenda must include India-specific behavioural finance and interdisciplinary studies

• Innovation must be guided by deep research, understanding and evidence

• High compliance costs can hinder the nation's competitive edge

• Efficiency and cost efficiency of all our measures is important because if you have to build competitiveness

• If there is a compliance burden on regulation, it's too high in terms of cost and time, then to that extent the competitiveness also goes down

• That will be a high-level centre which will be a continuing centre and that will also help with this research

• The initiative would allow policy schools and research institutes to collaborate on understanding how regulations impact the market, as there is always an inherent cost to regulation

• In the legacy software, sometimes some glitches may come because of the growing nature of the market

• SEBI is working toward a system where investors can eventually access a consolidated statement of all financial assets across different regulators, including pensions and insurance, subject to user willingness