Financial intermediaries key to strengthening market integrity: SEBI Chairman Tuhin Kanta Pandey

SEBI Chairman Tuhin Kanta Pandey, at a recent event in Mumbai, highlighted the crucial role of financial intermediaries — including banks, investment firms, mutual funds, brokers, and distributors, act as vital bridges between savers and enterprises, facilitating the flow of funds from those with surplus capital to those in need of financing.

He noted that today’s fast-paced and interconnected markets bring both opportunities and risks, including operational and cyber challenges. Pandey emphasised that intermediaries are not just channels for funds but key players in promoting financial inclusion, investor confidence, and market stability.

"Institutions to step up their governance and transparency standards, and suggested that greater collaboration between regulators and market participants would help to protect investors and maintain market integrity," SEBI chief.

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The event, brought together leading investment managers, bankers, and industry experts to discuss the evolving landscape of India’s capital markets.

Transparency and ethical conduct

SEBI chief mentioned that investor protection is made up of clear information, safe assets, and the proper behavior of intermediaries, while market integrity requires the aforementioned attributes. He pointed out that both are interconnected, and thus, they are the factors that not only sustain investor trust but also protect the markets from instability.

Intermediary responsibilities

• Client fairness: Investors expect access on fair terms — transparency in execution, pay-outs, and clean, auditable client flows.
• Disclosure and due diligence: When there is an increase in the number of products, it is important to make clear the risks, costs, and assumptions that are in the background. All the intermediaries should do strong due diligence, keep an eye on the products, and make sure that there is a proper risk match between the client and the product.
• Asset custody and operational resilience: Investors expect their assets to remain safe even when intermediaries are under stress. This requires strong back-office control, cyber-resilience, and contingency planning.
• Grievance resolution: The speed and quality of remedy matters more than the mistake itself. Institutions that learn and evolve through complaints build trust.
• Culture, ethics and governance: Technology and controls are not enough. Culture determines whether sales incentives reward sustainable client outcomes, whether whistle-blower systems work, and whether leaders model ethical conduct. Culture is the invisible infrastructure of trust.

Regulatory measures to strengthen trust

Kanta Pandey noted that SEBI has taken several initiatives, including:

• The “Validated UPI Handles” were used throughout the SEBI Check facility in order to stop cyber fraud.
• There was active social media monitoring in the process of misleading or illegal content removals, and more than 100,000 such posts were brought to the attention of the authorities.
• It is required to pay funds/securities directly to the client accounts.
• There is a provision for the voluntary freezing of trading accounts.
• The MITRA platform identifies inactive mutual fund folios and prevents fraud.
• Retail participation in algorithmic trading was made safer by the setting up of a new framework.
• SCORES was improved for faster investor grievance resolution.
• The exchanges and clearing corporations' governance was made more robust, along with mutual funds’ stress-testing, and transparency in the primary and secondary market processes.

Making markets fair, transparent, and resilient is the common goal of each initiative.

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Challenges ahead

Intermediaries now operate in an environment shaped by digital transformation, global linkages, cyber threats, outsourcing risks, algorithmic trading complexities, and rising customer expectations for faster service. Operational resilience and effective grievance redressal are essential to sustaining investor confidence.