Sebi says working on ways to tackle ‘regulatory arbitrage’ grey area

Sebi says working on ways to tackle ‘regulatory arbitrage’ grey area

Entities within and outside India are trying to exploit a scenario that has emerged off late: U K Sinha

Terming ‘regulatory arbitrage’ as an emerging grey area,Sebi Chairman U K Sinha today said such inconsistencies need to be addressed for effective implementation of financial market regulations.

Sinha said this issue of regulatory inconsistencies has been discussed during the meeting of Asia Pacific Regional Committee of IOSCO,a global body of securities market regulators from across the world.

Sebi is hosting the three-day meeting of this Committee here,which ends today.

Entities operating across jurisdictions of numerous regulators,within and outside the country,are trying to exploit a scenario that has emerged off late and can be called ‘regulatory arbitrage’,he said.


Sinha said that Sebi is working on more and more intra-region cooperation among the regulators and the Committee has also created a database of various regulatory actions taken by watchdogs in the region.

“So if any regulator is taking an action and needs help from other regulator in the region,it can consult this database. All countries have agreed to work together on this front,” he said.

Sinha said that a significant worrying development has been happening with regard to certain international regulators outside the capital markets jurisdiction are taking actions that have impact on the capital markets as well.

“We have debated on this issue (at IOSCO),” Sinha said,while adding that the discussions would be taken to their logical conclusion to address these grey areas.

Within the country as well,certain entities have been trying to exploit the different rules of different regulators for their benefit and Sebi in the past also has raised concern over such matters.

Sinha further said that Sebi is trying to bring in greater private sector participation in its discussions. On regional cooperation,Sinha said that investor education material is also being shared among the regulators and the material developed by Sebi has been well appreciated.

“If any regulator wants to use this material,they can do so subject to certain clearances. We can learn and benefit from each others’ efforts,” he said.

Sinha said that APRC is a significant block on the global arena as the region accounts for about 31 per cent of overall global market capitalisation.