Compliance should become a ‘low hum in the background’ of regulated entities: Sebi Chairperson

The statement comes as many companies have raised concerns over an increase in the number of compliances in the past few years.

This was the first public appearance of Buch after the Hindenburg Research’s recent allegations against her. Earlier this month, US-based Hindenburg Research had alleged that Buch and her husband, Dhaval Buch, had stakes in obscure offshore funds used in the Adani money siphoning scandal. The Buch’s have strongly denied the “baseless allegations and insinuations” made in the Hindenburg’s report.

At the Fintech event, Buch further said that the role of the regular, regulations and compliances is to protect consumers or investors in the case of markets. Equally on the business side, regulations and compliances are important as they foster trust in the system, she said.

Illustrating an example of small and medium Real Estate Investment Trusts (REITs), she said when the concept was launched by Sebi, the response from industry players was positive and they to be regulated.

“They were operating in an unregulated environment, and they were suffering from the fact that investors did not have faith and trust in their products and services because it was unregulated. They weren’t sure that the organisers, the organisations, would follow any rules,” she said.

Compliance is important not just for the investor but also for the business as both of them benefit from the requirement of protection of the consumer, she said.

Buch said Sebi is using Artificial Intelligence (AI) to speed up approval processes for various applications. It is also using AI to strengthen its supervision processes.

The regulator has put in place 16 different working groups to work on ease of doing business or compliance. Sebi has received 317 recommendations from various people and it is at different stages of implementation, she said.

Buch said the capital market regulator also does a lot of consultation before issuing any circulars or regulations. On the consultation paper of Futures & Options (F&O), which was issued last month, Sebi has received 6,000 responses. She said since the processes are automated, Sebi can collate these responses speedily and assess the market’s feedback in terms of the nature of compliances needed.

On July 30, Sebi, in a consultation paper, proposed a series of short-term measures to curb speculative trading in index derivatives, including restricting multiple option contract expires, raising the size of options contracts and intraday monitoring of position limits.