Why She Matters

• Expected to restore retail and institutional investors’ faith in Sebi after Chitra Ramkrishna fiasco, Put Option controversy.
• Strengthening technology and data gathering system while maintaining sanctity of regulations.
• Enhancing surveillance to detect market anomalies and create level-playing field for all investors.
• Upholding and creating regulations while understanding corporate and retail perspective.

Madhabi Puri Buch is the first woman head of Securities and Exchange Board of India (Sebi). She is also the first person from the private sector—she was earlier MD & CEO of ICICI Securities—to hold the post. The chairperson of the country’s sole markets regulator holds a pre-eminent position as she oversees equity markets, mutual funds, gold exchange, debentures and commodity markets. All these are rife with risk of manipulation, insider trading and other frauds that expose the vulnerability of retail investors. Sebi’s role is to create a safe and level-playing field for the smallest of investors. It is also an adjudicatory body that has the power to investigate wrongdoings, pass judgments and award penalties.
Needless to say, investors expect it to be a bastion of fairness and justice in an ecosystem inherently fraught with risks. Hopes of millions are riding on Madhabi’s leadership ever since she took the reins of the regulator on March 1, 2022.
Madhabi has been associated with Sebi since April 2017 when she was appointed as whole-time director and was given charge of collective investment schemes, surveillance and investment management. She was later appointed to a seven-member committee formed to design in-house technological systems. She has also passed several landmark orders. In 2018, noting the violation of a Sebi order asking Sahara Group to furnish details of repayment to investors in compliance with its previous orders, she ordered the group to return ₹14,000 crore it had raised from investors through fully convertible debentures. In January 2021, she investigated insider trading by a journalist of CNBC Awaaz and barred him, his mother and his wife from accessing stock markets. In May 2021, she passed an order against two persons who shared unpublished price sensitive information about Deep Industries stock on social media. In August 2021, she identified multiple entities that allegedly used unfair practices to trade in Zee Entertainment Enterprises shares.
Sebi’s role has become even more important in view of serious professional breaches at India’s largest stock exchange, National Stock Exchange (NSE), by its former CEO. This was followed by another controversy regarding Sebi’s order on change of rules regarding Option Trading, and its eventual retraction, without providing any explanation for previous or later actions. A large number of retail investors had lost huge money in Hindalco put options due to this. In another case, it was discovered that Sebi appointed a person it had penalised in the NSE case as dean of its National Institute of Securities Market. All this happened just before Madhabi’s predecessor, Ajay Tyagi, left. Soon after her appointment as Sebi chairperson, she was questioned by the parliamentary committee regarding the NSE scam. Inheriting an office mired with controversies is challenging, especially when millions of investors and numerous entities associated with Indian capital markets are expecting you to reinvigorate investor faith in the regulator.
Under her, Sebi is going through an overhaul to enhance accountability and fairness. She is keen on improving systemic efficiencies through enhanced focus on technology, especially in areas of data and cyber security. Rather than making decisions in silos, she is driving the process of seeking extensive market feedback on key policy changes. Industry sources also reveal that she is seeking additional powers from the government so that Sebi can monitor social media channels to crack down on front-running in markets. — Rajiv Ranjan Singh