The Securities and Exchange Board of India (Sebi) has approved a series of measures on conflict of interest, disclosure and recusal norms for officials of the market regulator.
The Sebi board also allowed foreign portfolio investors to settle their trades on a net basis and measures to revamp the fit and proper norms for market intermediaries, the regulator said in a statement.
The Sebi chairperson and whole-time members will be subject to the same norms for investments as other employees. Their investments in unlisted companies and other commercial ventures have to be liquidated or frozen during their tenures.
The market regulator will set up a digital system to manage conflict of interest and the whistleblower system for reporting perceived, actual and potential conflicts of interest.
Details of immovable property of the top officials of Sebi including the chairman, whole-time members, executive directors and chief general managers will now be publicly disclosed in the same manner as applicable for All India Services and Central civil services officers.
In November, a high-level committee had proposed significant reforms to Sebi’s conflict of interest rules, including annual public disclosures of assets and liabilities by the chairman, whole-time members and employees with the rank of chief general manager and above – a first for the regulator’s top brass.
The aim was to strengthen transparency and ensure that any personal, professional or financial relationships that could affect independent decision-making were identified upfront.
Among other approved norms is the mandate of disclosing assets, liabilities, trading activities and relationships of employees, the chairperson and whole-time members and a cap of 25% for investments managed by a single intermediary.
Oversight panel
The board decided to hand away the decision to constitute a separate set of regulations for board members and the creation of an oversight committee on ethics and compliance to the Central government.
The market regulator constituted the high-level committee in March, following allegations of a conflict of interest involving Madhabi Puri Buch, the former Sebi chairperson.
In August 2024, US short-seller Hindenburg Research alleged that Buch and her husband had undisclosed stakes in entities incorporated in Bermuda and Mauritius that were purportedly linked to the Adani Group, which Sebi was investigating at the time over allegations of fraud. The Adani Group rejected the claims, as did Buch and her husband.