Financial intermediaries must ensure clean, auditable books: SEBI chief

Financial intermediaries must ensure clean, auditable books: SEBI chief

As the market grows, the real differentiator for market institutions will not be how swiftly they comply with regulations, but how meaningfully they internalise them, believes SEBI Chairman Tuhin Kanta Pandey. He was speaking at the Morningstar Investment Conference in Mumbai on November 4. “The strongest and most respected firms will be those that see compliance not as a ceiling, but as a foundation. Building upon it should be a culture of integrity, resilience and transparency that earns investor trust every day. Institutions must recognise that the ultimate measure of success lies in the experience and confidence of investors, checking how properly advances are resolved, how accurately settlements occur, and how transparently disclosures are reported. And institutions make such transparency a habit,” he explained.

He noted that financial intermediaries play a very important role in the growth of the market. “Investor protection and market integrity are often used as regulatory slogans but they must translate into real life discourse. If investor trust is exploited the market will lose liquidity. The intermediary sits at the junction of these two tracks and needs to act decisively in order to deliver on those twin promises of protection and integrity,” he said.

Today, he said, they are navigating an environment shaped by accelerating digital adoption, global market linkages, and changing investor demands. Cybersecurity remains a primary concern. “Firms must safeguard sensitive client data and critical infrastructure from sophisticated threats. Third party and outsourcing risks have grown with greater reliance on technology vendors and service providers, requiring stronger oversight and due diligence,” he said.

"Today's investors expect not just access to market, but access on fair terms, that gains transparencies in dealings, transaction execution, and payouts. Intermediaries must ensure that their own book, blind flows are clean, separate, and auditable," added Pandey.

Algorithmic and high-frequency trading continue to reshape market dynamics, bringing efficiency along with new vulnerabilities. According to Pandey, “The rise of algorithmic and high frequency trading brings efficiency, but also demands robust risk controls, real-time monitoring and compliance safeguards. Intermediaries must also ensure operational resilience, maintaining business continuity and Readiness amid Market volatility and Rapid digital transformation,” he said.

Operational resilience is also moving to the forefront. Institutions are being urged to maintain continuity amid volatility and digital transformation. “Investors expect speed and personalisation, but they also expect reliability,” he said. Timely grievance redressal remains a crucial measure of investor trust. He added that these challenges call for a culture of vigilance and adaptability when technology and compliance advance hand in hand to uphold Market confidence and investor protection.

In response to evolving challenges, SEBI he noted has introduced reforms to simplify compliance and modernise outdated frameworks. Recent steps include enabling intermediaries to file required compliance reports through a single exchange, UPI Verify etc.

The chairman also highlighted that they are reviewing the Stock Broker Regulations of 1992 to make them more relevant and streamlined. “To help long-term investors, a proposal has been put forward allowing individuals who bought physical securities before April 2019, but could not transfer them earlier, to now complete those transfers. The measure is expected to offer long-awaited relief to physical shareholders,” he said. On the sidelines, Pandey said that a circular on this should be expected as soon as December.

Pandey added, “When institutions lead with integrity, markets follow. And when markets follow, investors gain confidence.”