SEBI Chair Emphasizes Swift Action Amid Power Structure Critiques

Tuhin Kanta Pandey, Chairman of the Securities and Exchange Board of India (SEBI), stressed the importance of prompt action in maintaining market discipline during a media briefing held in Mumbai on October 28, 2026. His remarks came in response to criticisms regarding the concentration of regulatory powers within SEBI, particularly in light of the recently proposed Securities Markets Code (SMC).

During the session, Pandey was questioned about SEBI's position on the SMC's clauses that limit the regulator's ability to utilize funds from its general reserves. While he refrained from taking a definitive stance on those specific provisions, he confirmed that SEBI has formally submitted its feedback to Parliament for consideration.

A significant part of the discussion focused on the criticism that SEBI’s combined roles in rule-making, enforcement, and adjudication might violate the constitutional principle of separation of powers. Pandey defended the current regulatory framework by explaining that this design is intentional and common internationally. It facilitates swift responses necessary to protect market integrity and investor interests.

"These regulatory systems have been structured, not just in India but globally, to serve market needs that demand rapid intervention," he explained. Pandey also clarified that SEBI maintains separation within its own processes. The investigative teams operate independently from those who make quasi-judicial decisions, a distinction recognized explicitly by the SMC.

Beyond procedural questions, Pandey addressed other market concerns. On the topic of liquidity and derivatives regulations, he pointed out that SEBI seeks to avoid overly paternalistic approaches that restrict market participant choices, aiming instead for balanced oversight.

The chairperson also spoke about the issue of exchanges listing their own shares. He noted the inherent conflict this poses since exchanges function partly as regulators. Self-listing could compromise their ability to maintain impartial regulation, suggesting SEBI is cautious about such developments.

Looking to improve market conditions, Pandey revealed SEBI’s plans to target shell companies, especially those in the small and mid-cap segments, for delisting. The regulator intends to revamp the framework for small and medium enterprise (SME) initial public offerings (IPOs) to enhance stock liquidity and transparency in these categories.

Regarding the future of futures and options (F&O) markets, Pandey indicated that SEBI prefers not to impose strict controls that limit investor freedom, emphasizing a regulatory approach that encourages responsible participation rather than excessive restriction.

When asked about the possibility of reviving closed regional exchanges such as the Kolkata Stock Exchange, he responded that while SEBI’s rules do not prohibit new exchanges, their viability depends heavily on liquidity, business models, and sustainability. The shift toward electronic trading has diminished the need for physical proximity, and any new exchange would need to demonstrate a robust and flexible operational plan.

This focus on adaptability reflects broader trends within global financial markets, where technology and regulation continuously evolve to meet changing investor demands and market dynamics.

SEBI plays a critical role in India's financial ecosystem by overseeing capital markets, protecting investors, and ensuring transparent operations across exchanges and intermediaries. The regulator’s ongoing efforts to balance effective oversight with market development aims to foster confidence and growth in one of the world’s largest emerging economies.

As the SMC and other regulatory reforms progress through legislative processes, SEBI’s responses and adaptations will remain closely watched by market participants, policymakers, and investors alike. The careful navigation of power distribution, regulatory speed, and market fairness will shape the future landscape of India's securities markets.