In the past three years, Madhabi Puri Buch had one of the toughest jobs as a regulator — keeping retail investors as safe as possible in a roaring bull market. The Securities Exchange Board of India’s (SEBI) first woman chairperson – and the first to come from the private sector – who completes her three year term on February 28 can take credit for achieving that, though some would argue most of the guidelines came only in the last few months amid a falling market.
The futures and options (F&O) and small and medium enterprises initial public offer (SME-IPO) guidelines are likely to go a long way in curbing retail enthusiasm in riskier segments. Further, the relentless crackdown on finfluencers has also ensured that there is more awareness about people providing trading tips under the garb of educational courses. Even mutual fund houses felt the regulatory pressure, with some even complaining that the regulator was being too harsh.
That Buch managed to bring in all these tough guidelines when retail investors were flocking to the market and it was rewarding them for even being reckless is quite commendable.
The numbers speak for themselves: The number of unique investors at the National Stock Exchange crossed a whopping 110 million last month. The total market capitalisation in February 2025 is `392.6 lakh crore – up 55.15% from `252.4 lakh crore in February 2022. The money raised from mainboard initial public offers between March 2022 and now is `2.77 lakh crore while `16,791 crore has been raised by SMEs. Overall, the Sensex is up 32% and the BSE Mid-cap index is up 68% during her tenure. And this despite a correction since September 2024.
Amid all this hectic action, SEBI tried to keep tight vigil and used the powerful tool of communicating through data. There were regular reports on losses being made by investors in the F&O market. In fact, it even floated a paper on royalty payments being made by Indian companies to their foreign partners.
Data show that during the past three years, the markets regulator published 197 reports for public comments compared to 112 in Ajay Tyagi’s five-year period and 71 in that of UK Sinha from February 2011 to March 2017.
There are other feathers in the regulator’s cap as well. These include introduction of a new asset class (one that lies between portfolio management services and plain vanilla mutual funds), easing norms for investment advisors and faster rights issues. It has also thrown its weight behind the launch of Jan Nivesh – a `250 systematic investment plan by SBI Mutual Fund – by convincing the service providers to the asset management companies (AMCs) – distribution, registrar and transfer agencies (RTAs) – to waive their fees for small-ticket SIPs. This will bring down the cost of acquisition for AMCs significantly.
But the best part: Buch regularly let everyone know about the regulator’s views on market conditions. From identifying froth in the mid-cap and small-cap space over a year back to warning about money moving to cryptocurrencies if it is not regulated when both the government and the Reserve Bank of India were strictly against it, Buch was never short of a strong opinion.
Sample these: “We will never allow another Karvy in our market… If another Karvy-like instance happens, it will be over our dead bodies.” Or “Our ultimate objective in SEBI that every entity we regulate, compliance should simply be a low hum which goes on in the background.”
But then, questions were raised about Buch’s own compliance when US-short seller Hindenburg Research threw a volley of allegations against her and husband Dhaval that included complicity with the Adani Group for using the ‘exact same funds used by Vinod Adani, brother of Gautam Adani’ to invest — which it interpreted as a key reason for SEBI’s inaction against the group.
There were also allegations about conflicts of interest due to a 99% ownership in the Indian consulting firm Agora Advisory, which continued to earn revenues despite her appointment as SEBI’s whole-time director and chairperson. While the Buch couple denied all this vehemently, one unfortunate fallout was the end of Buch’s interaction with the press after Board meetings.
Another setback was the handling of employee protests. After reports accused senior SEBI officials of misbehaviour, the markets regulator issued an official statement accusing employees of being influenced by outsiders, and then withdrew it as outraged employees continued to protest.
There were other setbacks, too, including the inability to slash expense ratio due to pushback from the mutual fund industry. Even the T+0 settlement, a first globally, did not find many takers as both retail investors and brokerages are yet to be convinced about its utility. Further, making depositories pay directly to investors, thereby taking out brokers from the equation is yet to happen. Even her call to regulate cryptocurrencies is yet to be heard.
Interestingly, both her entry and the end of her term today (February 28) is marked by foreign investors exiting the Indian market. In 2022, it was due to global volatility owing to Russia-Ukraine conflict and now the scourge of Trump tariffs is keeping them on tenterhooks.
In all, Buch’s three years as the SEBI chairperson wasn’t short on action. Of course, one may complain that there was perhaps too much action. One doubts if any regulator has made so many headlines – both, for the right and wrong reasons.