Criticism Of SEBI Norms Is 'Pavlovian Response', Says Madhabi Puri Buch

SEBI chief Madhabi Puri Buch on Tuesday described certain marketmen's criticism about its regulations as a "Pavlovian response" and asserted that the watchdog has come out with measures for the ease of doing business.
     
Addressing reporters after SEBI's board meeting here, she also said the regulator is working on having a system of returning the files seeking approval for capital raising rather than rejecting them in case the application papers are incomplete.
     
At the board meeting, various amendments, including for share buyback norms, were approved.
     
Responding to a query about various SEBI norms aimed at protecting investors are facing criticism, Buch said it was a "Pavlovian response".
     
"The marketmen who react and criticise are those who have not even read the report even partly. So why always this Pavlovian response? There are two to three red-letter words in the market and the reaction is always the same," she said.
     
However, she did not elaborate on the red letter words.
     
Generally, Pavlovian conditioning is a situation where an individual's response is based on instinct rather than understanding the whole situation.
     
"Let me share some data. Since April this year, SEBI has issued as many as 115 circulars/regulations. Of this, as much as 45 per cent are for regulatory easing or meant at ease of doing business and the rest were regulatory in nature," Buch said.
     
Regarding the issue of data localisation for Foreign Portfolio Investors (FPIs), SEBI Whole Time Member Ananth Narayan G said the Asia Securities Industry & Financial Markets Association (ASIFMA) had written to the regulator seeking relxation/clarity on local data storage.
     
"SEBI has not asked FPIs to keep their client data in onshore/local. What we wanted them to do was to keep a copy of the KYC details. And we clearly told them this could be done by their custodians and authorised dealers and not directly by them," he noted.
     
About bringing new share buyback norms, Buch said the regulator does not want a situation where "we allow companies to create a situation wherein minority shareholders lose out by creating a position of Peter pays for Paul's tax".
     
"What we are increasingly finding is that we Indians are good at following the letter of the law and not the spirit of the law or what can be called technical compliance of the norms. By adding more words to the law we are doing our part a bit more to ensure more follow the spirit of the law by closing as many loopholes as possible. What we are trying to do is that compliance is not merely technical," she said.
     
The response was in the context of the proposed amendments to the share buyback norms.
     
She also stressed that SEBI would never want to be the reason for a company to miss the planned capital raising.
     
"The new regulations are aimed at not allowing repeat-offenders who fool the issuers/their clients by blaming the SEBI to keep on doing that. We want to ensure that i-bankers and advisors meet all our conditions and come to us and not just repeat their age old practice of missing out on key disclosure norms.
     
"Normally SEBI is accused of stonewalling them, which we are not and we don’t want to be, for sure. I myself was an investment banker and I know how time matters in the market," she said.
     
On having Investor Risk Reduction Access Platform, SEBI chief said the risk reduction mechanism allows direct access to the market if the broker's platform is down, and this is a global first.
     
"If the broker is slow to make this new facility available to his/her customers the exchanges are given the freedom to allow this suo moto. No other market has such a pro-investor facility and this is global first.
     
"... We are allowing an affected investor to directly access the exchange platform and execute his/her deal. It is as simple as that and only for that and not to make a claim that he or she could have gained x amount had he sold at the peak or bought at the peak. We will not indulge in any real or imagined loss," she said.