The Securities and Exchange Board of India’s (SEBI) Chairman Tuhin Kanta Pandey on Friday said that its board will consider report of the ‘High Level Committee on Conflict of Interest, Disclosures and related matters in respect of Members and Officials’ of the regulator on December 17.
“The board will take a final call on the recommendations made in the report,” Pandey told reporters after inaugurating the SEBI pavilion at the India International Trade Fair (IITF) here. The panel submitted its report to Pandey on November 10. The report has proposed comprehensive reforms to bring in transparency by way of greater disclosure and a “zero-tolerance” culture to address conflict of interest of top officials of the capital market regulator.
It has also recommended setting up a secure and anonymous whistleblower system for reporting conflict of interest, ban on expensive gifts, a two-year restriction on post-retirement assignments, and creating a post of Chief Ethics and Compliance Officer (CECO). It said the SEBI Chairman, whole-time members, and chief general manager-rank officers should make public disclosure of their assets and liabilities.
“Adoption of these reforms will align SEBI with international best practices, strengthen its reputation, and reinforce its independence and integrity as India‘s capital market regulation,” the committee said in its 98-page report. It has also suggested that all SEBI board members and employees should make initial, annual, event-based and exit disclosures of assets, liabilities, trading activities and family relationships as well as other professional and relational interests.
The disclosure is to be made to the proposed SEBI’s Office of Ethics and Compliance (OEC) and the Oversight Committee on Ethics and Compliance (OCEC). Also, it recommended “induction and refresher training that stresses ethical conduct and fostering a zero-tolerance culture for conflict of interest”.
Growth of Market
Earlier, in his address, SEBI Chairman said that almost every day nearly one lakh Demat accounts are being opened. This indicates how the number of investors is on rise. “As on October 1, there are more than 21 crore Demat account of nearly 13.6 crore investors,” he said. Further he highlighted that mutual fund saw an investment of ₹80 lakh crore recording a growth of more than 7 times in a decade.
“These data are encouraging, but it also enhances our responsibility to ensure that investors (especially first time investors) should invest after proper consideration and also take all the precaution,” Pandey said.
According to him, an Investor survey has brought the fact that though 63 per cent of households are aware about products of securities market, though only 9.5 per cent of them are investing. “Financial inclusion does not just mean providing access, but also to see how many people are aware about various aspects and do they have trust in the market or not,” he said while adding that there is need to bridge the gap between awareness and participation.