What could be on the to-do list of incoming Sebi chairman Tuhin Kanta Pandey

The Odisha cadre IAS officer of 1987 batch is taking charge as SEBI Chairman at a time when the capital markets regulatory body has been regularly grabbing headlines – at times not for the right reasons.

As Tuhin Kanta Pandey prepares to take over as the 11th chairman of capital market regulator Securities and Exchange Board of India (Sebi), all eyes will be on his immediate key action plan, and the key challenges that lie ahead.

The Odisha cadre IAS officer of 1987 batch is taking charge at a time when the capital markets regulator has been grabbing headlines, at times not for the right reasons. His predecessor - Madhabi Puri Buch – has had an eventful stint, introducing a host of reforms and focusing on technology, even as she faced a opposition from some market players and even internally, at Sebi.

There are unfinished items on agenda, and the incoming, seasoned bureaucrat will be expected to use his rich experience in the government apparatus to balance what market participants and policy makers want, keeping investor interest and protection at the centre stage.

Many in the market believed that Buch, at times, had a stricter approach and did not heed to the others’ view, or any feedback. Market participants, however, have said that her actions did strengthen the safety of the equity market ecosystem from an investors’ point of view.

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Some of the pressing issues on top of the new Sebi chairman’s agenda are likely to the disclosure requirements by mutual funds, and the need to balance regulation and innovation.

Accommodative Stance towards Mutual Funds

If there is a category of participants that felt most-affected by Madhabi’s tenure, it was undoubtedly the mutual funds. Regular attempts were made by Sebi to tighten the regulatory framework for asset management companies (AMCs) and while some succeeded, others were met with some opposition.

For the next Sebi chairman, the issue of expense ratio - which Madhabi Puri had been trying hard to slash - would be of immediate concern. A vast section of the asset management industry would be looking at the new chairman for direction here, and preferably a more accommodative one.

Another key agenda related to mutual funds is the proliferation of thematic funds, and the new chairman may need to come up with a mutually acceptable solution.

Madhabi Puri Buch was of the view that fund houses were launching thematic NFOs as it allowed AMCs to offer higher commission to distributors, as against existing schemes. The Advisory Committee on Mutual Funds had met earlier in February 2025 to deliberate on the matter, and it remains a pending issue.

Internal Employee Unrest

This will be a key challenge for the incoming chairman, given that protests by dissatisfied employee during Madhabi’s tenure had reached unprecedented levels. Her private sector background and approach saw many Sebi officers lodge formal complaint with the Finance Ministry, alleging ‘toxic work culture’, among other misgivings.

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Buch took pride in setting in motion mechanism to encourage Sebi staffers to engage more with market participants and take a consultative approach. This possibly did not go well with some staffers, who strongly protested against the new work culture which they said was being imposed on them.

Tuhin Kanta Pandey should hopefully be able to handle this crisis, given his vast experience as a bureaucrat and part of the government ‘system’.

Balance between Regulation, Innovation & Flexibility

One key grouse against Buch was that she ‘over-regulated’ market participants, whether broking firms, merchant bankers or mutual funds. The off-the-record view of market entities was mostly around over-tightening, when asked about Madhabi’s tenure.

Many participants felt a lack of flexibility, which they claim may have impacted product innovation. While one could always argue that she was protecting investors against risks of mis-selling, it was cited as a widespread belief that she may have gone slightly overboard, at times.

While Sebi has continued to take a consultative approach in framing rules, the newly appointed Sebi chairman may be expected to take further steps to allay concern around any kind of over-regulation.

Disclosures, Instant Settlement, IPOs

The new chairman shall also be expected to quickly move on some of the unfinished items of agenda, given that many of them may be of vital importance to the ecosystem.

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The regulator is in the process of strengthening disclosure norms for companies looking to enter capital markets through fresh issuance of paper. This has been in the works for a while, and any effort by Pandey to expedite the process will be well-received.

The instant settlement process –allowing investors to get cash/shares credited instantly – was announced in a high-profile manner, but since then, has been hanging mid-air as the crucial T+0 mechanism – a step towards instantaneous settlement -- has not picked up.

The new chairman shall be expected to address the root cause behind the delay, instead of any window dressing by enhancing the number of eligible brokers.