SEBI chief on market regulation: Why optimum balance is key

Tuhin Kanta Pandey, Chairman of the Securities and Exchange Board of India (SEBI), on Monday (May 4) made a case for “optimum regulation” in India’s fast-evolving financial markets, saying the right balance is critical to sustain growth while protecting investor trust.

Speaking at the IMC Capital Markets Conference 2026 at the NSE, Pandey said markets are undergoing rapid change, with new products, participants and risks reshaping the landscape.

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“Too little regulation can damage trust, while too much can slow growth. SEBI believes in maintaining an optimal balance,” he said, underlining the regulator’s disclosure-based framework.

Why ‘optimum regulation’ matters

Pandey said the evolving nature of markets, driven by innovation and rising retail participation, requires a calibrated regulatory approach.

Excessive rules could stifle innovation and capital formation, while insufficient oversight may undermine investor confidence and market integrity.

He reiterated that SEBI’s focus remains on transparency and disclosures, allowing markets to function efficiently while ensuring adequate safeguards.

How SEBI is approaching it

The SEBI chief outlined a multi-pronged approach to maintain this balance:

• Strengthening market integrity: Calling it “non-negotiable”, Pandey said robust governance standards remain central to SEBI’s framework.
• Greater role for boards: He urged corporate boards to ask “tough but constructive questions” to enhance accountability.
• Responsibility of intermediaries: Market intermediaries, he said, are not just service providers but key pillars in maintaining discipline.
• Monitoring emerging risks: SEBI is working on a report assessing risks linked to artificial intelligence and is coordinating with other regulators on new-age threats.

Need for deeper markets, long-term capital

Pandey also stressed the importance of expanding India’s market-based financing ecosystem. He said the country needs more long-term capital to support growth, and a deeper bond market can complement equities in meeting this requirement.

Policy alignment and KYC push

Referring to broader reforms, Pandey said Nirmala Sitharaman has emphasised the need for a unified Know Your Customer (KYC) framework across financial services to improve efficiency and reduce duplication.

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