Tuhin Kanta Pandey completed one year in office as Chairman of the Securities and Exchange Board of India (SEBI). Moneycontrol’s Senior Consulting Editor, N Mahalakshmi, sat down with him to understand how the past year has unfolded, the key policy issues currently under SEBI’s consideration, and where the regulator’s focus will lie in his second year at the helm. Here is the full transcript of the exclusive interview.
Q. During this past one year, there have been several strides that SEBI has taken, starting from ease of doing business across constituencies, from foreign investors to brokers, a bunch of regulatory reviews, steps towards investor awareness and protection, and paving the way for the NSE IPO, which has been pending for a long time. Mr. Chairman, please tell us, how has this last one-year journey been for you?
A. The last year has been very challenging year, in general for markets, the external, the geopolitical developments, the uncertainties. But also, I would say that, we have, really managed to have very good, primary markets 2025, We were number one, in IPOs and number three, in terms of value and debt and equity issuances have kept pace despite, severe, external developments. So, for SEBI, we have had several reforms and I would really say that this was a year of reforms, aimed at optimum regulation. Neither, unnecessarily increasing regulation nor, under regulating. Principles that we outlined in the initially, transparency, trust and teamwork and technology, all these principles have been well applied, by SEBI officers in association with market participants. We could yield so much of reforms, about 58 reforms, ease of doing business alone.
Q. In what areas do you think that SEBI has achieved optimum regulation? In the sense that, these are areas that can continue with the current regulations for the next couple of years at least. And which areas do you think, will take priority from here on over the next one year?
A. I think that is a matter of assessment. Once we go through the entire gamut of, regulations. We have done Stock Brokers Regulation, the complete overhaul, as well as the Mutual Fund Regulations, a complete overhaul. Also, the, residual point on MF classification we addressed. In total, I could say that, the comprehensive reviews allow us to look at really, doing much more than, small, piecemeal fixes. Of course, somewhere, you are required to fix, small points as well, because if the market demands. But this approach, where we are right now, we are looking at LODR Regulations and Settlement Regulations and also the PMS Regulations. We think that, we will have done substantial work and going forward, of course, we will have, the new security market code and we have the changeover of the regulations to the new code, once it is enacted.
Q. One of the things of interest to everyone in the market has been the derivative related regulations. In the first 8 or 9 months a bunch of changes happened. Is this the level at which we rest or do you see, more needs to be done to curb speculative activity or excessive, retail trading?
A. I think on the derivative markets, particular, concern was only around index options, short dated options on expiry day, weekly options. The rest of the market, I think is not of that concern. In that market, of course, we had put it out, the full study reports saying the extent of losses, and that created a lot of awareness around why, a whole set of people were actually coming to this market and not being successful in making profits because, these are a very complex market. Also, the way it was being sold out by the so-called finfluencers, as in that market, to really make big money overnight. I think that particular education has been belied and, I would say, miseducation. So that is also another action, against such influencers who without a registered investment advisor license are trying to give advice and propagating through various social media forums, is another area of interest to us in terms of enforcement. We have taken some measures both in October 2024 and May 2025, a series of six measures in May 2025, the last of it kicked in December. We would like to see the impact of these measures and, and also look at the situation from the data point of view, again and then if we find that there is, intervention necessity, we will then explore pathways in consultation with industry, how to do it right.
Q. One issue a lot of people have talked about is, raising the entry criteria for participants into the derivatives market. In some of the Western countries, having certain, certification or to be an accredited investor, is required to participate in the derivatives market. Do you think something like that, will be in the consideration and or do you think it will be retrograde?
A. That will again depend upon what kind of analysis will come forward, in what way the measures have acted, and, then it will be like exploring different pathways, which might include the pathways that you are suggesting. But they are not the only pathways.
Q. So, you're saying it is not necessary right now to put any entry criteria for, for that?
A. Not, till we have deliberated on this issue and worked out the thing. We can't be doing flip flopping. We should move consistently. With data-based approach and consultative approach in this matter.
Q. There are some concerns related to proprietary, trading. We have reported a lot on this issue, including, a case in Surat, which was beyond the regulatory, perimeter. Do you think anything, that needs to be addressed, to solve this problem?
A. I would not like to react on, one specific case somewhere and, whether it requires an enforcement action and so on. So, whatever, regulations, we have, we'll just get on with it.
Q. One question on the IPO market, there are concerns about the quality of issue and more importantly on the utilization of funds, are these areas that concern you?
A. We should not really be stereotyping or brushing with one thing. We are a very robust market which is full of disclosures and these disclosures are seen by myriad players, those who are, for example, taking anchor positions, their own teams, research on this. Even the question of valuation, which is also taken as a concern, is actually something which is, competitive. All the competitive data, also necessary comparable data is put out, in the DRHP and RHP and the people take a call on this. We have to let the markets function. There are issuers on one side and their investors on the other. We have an anchor category precisely for that. At you and me level, we are perhaps not being able to really have that kind of a savvy to look at into all the information and analyse it. But when you are taking bigger positions and obviously you have the necessary wherewithal and research available where you can actually question those valuation and then take positions or not. There was also something like, whether there should be only fresh issue. We have done an analysis and we found that overall, we are reaching a level of 55 percent offer for sale and 45 percent fresh issue, which is actually a normal average level. OFS level reached about 87 percent in the year 2020 and the year before 2025, it was 57 percent. So, it has only come down, the OFS is 55 now and the rest is 45 on the average. Of course, individual companies might differ. The capital comes first or at what stage capital is raised, economically there is no difference. So, I would say that, the people have a choice whether they just want to put in their money, in the IPO or not. Anchors have their choice whether they want to put in the money in this, in the book building processes. People also question the companies as regards not only the valuation but also their business models. The point is that if you are looking at it from the angle of only a listing pop, then that is not the way I think the market should be. When you are going into investing in a company which is going to work for a long time, you don't really want to become a shareholder for a day.
Q. The utilization of money that goes into the company through IPO, also comes into question. So, people have been saying, how to monitor that? Is there something that can be done?
A. There is a lot which has been done in SMEs space also in that regard. There is a great deal of, monitoring by exchanges on that, even in the main board. The things are going towards the third party monitoring as well, this subject is really evolving. On the one hand, the people will say excessive monitoring is not good. On the other hand, say that some kind of monitoring is also necessary. Then there is also an element of flexibility that things may change for a while. In that case, the companies have the option to go to the shareholders once again and, change the object of issue in case there are any such contingencies. So, a balanced view is being taken. Now in this LODR, we are also doing a comprehensive review, if there is any suggestions, any issues, obviously, the concerned committees will also look into that.
Q. Do you see any changes in the, takeover code? Anytime soon? Because there was a review panel that was set up and had made its recommendations. What is the status of that?
A. We will be taking it up, we have the Takeover Code Report. We are looking at it, once we have looked at it, we would also come out with the consultation paper, along with report we will put it in public, but only after we have seen it and we have a consultation paper ready.
Q. One question around Tiger global issue, with the Supreme Court judgement, there were a bunch of concerns. How do you look at this issue? Have there been any, concerns from the foreign investors that have been placed?
A. I would say that whenever these kinds of issues are decided, there will be concerns, now, how the concerns are then processed, because initial concerns about the determination by the apex court and then what implications it might have for some of the transactions. It was, quite a settled issue earlier, and CBDT, had taken out their line on this. Because so many treaties have also been modified subsequently. So, this is something, for the government to engage with the investors and others on this point.
Q. It has been raised time and again, that the depth in the cash market in India is little weak as compared to the F&O market. Do you think there is any fix, for this, of course, the market will evolve as the new issuances come up, float will increase and the volumes will naturally go up. Is anything else that, as a regulator you think can fix this?
A. The cash market volume has almost doubled in 3 years. So, there's an upward of Rs 1.2 lakh crore per day. Now, we want, cash markets to be more liquid. Certainly, and we have also, looking at, the short selling and SLBM framework under the cash market, these regulations have been there for quite some time, but they haven't really taken off in the right spirit. Of course, there is an alternative that we have of stock futures where, similar shorting can be done and market can make use of it. However, there is suggestion that the number of stocks in the stock futures should be higher there. I think more than 200 stocks are there. Many people would like the number of stocks to be higher but that of course depends upon the criteria, which we had earlier reviewed. So, whether there is any, opportunity to look at this criterion again, we will see. But still, I think it will not be as much as the people would like. We have to see the liquidity and the trading in that particular stock before we give entry to the derivatives market in stock futures. But certainly, SLBM framework, yes, we are open to it. The working group is looking into it.
Q. But why do you think that it has not taken off? Traditionally, one of the fears that people have about shorting stocks, is that the regulators don't take a very lenient view of it as opposed to long positions. Is that, what keeps people, wary of getting into this market?
A. I think we will wait for that working group report to really see what are the barriers, that are there. Before I comment on this issue.
Q. Anything around margins, on delivery trades, is there some possibility of leniency on margin for delivery trade to prop up the cash market trade or it’s a wrong path to take?
A. As I said, that this working group will see.
Q. Two questions on the MF regulations. One is around, the fact that, SEBI is, suggesting that these solution-oriented funds like children and retirement funds should be shut down. Some of the mutual funds have raised concerns that shutting down will have a lot of consequences. One there is an active book that is going on, if fund mergers happen, then the tax will get triggered. So, there is a tax incidence that is to be borne. Also, the expense ratio of funds will change if they move from one to another. Will you be open to appeal or this or it is the final diktat?
A. I think I will have to discuss it first. I won't be able to immediately respond.
Q. A big picture question on the move towards lifecycle funds. Some of the funds, are saying that, the lifecycle management is really the job of a mutual fund distributor or the investment advisor. They are supposed to tell you; how much would you allocate across various categories? By putting these structures, you are pretty much eliminating the job of an advisor and distributor. You think this is really the intent? The second question around this is, in advanced countries where these products have succeeded, in a lot of Western countries, the tax incidence for both equity and debt is the same. But here, if you have a 30-year, investment period, predominantly in equity, which has a different taxation, at the end point, you have predominantly debt, which is at marginal tax rate. So, this is another concern that people have raised. How you will see it?
A. So, those concerns we will examine.
Q. On a personal front how this last year has been, personally for you, what has changed for you, being at SEBI versus, working in Delhi?
A. I was also dealing with the economic sector for the last so many years, at policy level, which is a different level. This one is more, implementation, nitty gritty and regulations. I think in a more intensive way. But we take it all the jobs as they come.
Q. If you want to just summarize what should market participants expect from SEBI over the next one year? What would you say?
A. We have three broad mandates in the act itself, investor protection, market development and market regulation. And then you have such a large market where we have different products. We have, huge number of investors, different kinds of investors, and issuers and market infrastructure institutions, and then funds, bonds, REITs, InvITs and commodities. With the three broad mandate and the expanse of the market, there is enough work. Even if you work 24 hours a day, there are things to do, particularly at this time, where capital market in India will play a very critical key role in India's growth journey and India's growth journey itself will propel the capital markets forward. We have seen last few years, how rapidly things have grown. In ten years’, mutual funds have grown from Rs 12 trillion to Rs 81 trillion. Some of the people who are in mutual fund industry, they tell us, they could have never imagined the kind of growth. Because, when growth happens over a larger base, then absolute amount, is really very stupendous. And when you have a high growth, which happens on increasingly larger base, that is of a certain proportion, which we have not really been exposed to earlier. So, therefore there is a big challenge, that there is an opportunity here and how do we, really keeping market integrity, market confidence and investor protection, make capital available for the real sectors of the economy in the most, efficient way. And not only for one sector but for broad base and for, not one kind of investors, but different investors, with the different risk appetite.
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