SEBI 2024 Review: Reforms Amid Challenges

In 2024, the Securities and Exchange Board of India (SEBI) introduced several key reforms aimed at enhancing transparency, curbing speculative trading, and strengthening the financial ecosystem. However, the year was overshadowed by controversies involving Chairperson Madhabi Puri Buch, which slowed the pace of reforms, experts observed.

Tackling Derivatives Frenzy

SEBI implemented 6 measures to address widespread losses among small investors due to speculative trading in the derivatives market. These included discontinuing weekly expiries for most index derivatives, which led to a 30% drop in futures and options trading activity. The move hit speculators hard but aimed to stabilise the market.

Strengthening SME Listings

Following incidents of manipulation in small and midsized enterprise (SME) listings, SEBI tightened norms for listing and disclosures. These measures ensure only companies with strong track records can raise funds and get listed, reducing risks for investors.

Introducing Same-Day Settlement

In March, SEBI launched an optional same-day settlement cycle (T+0) for stock market trades, the first of its kind globally. While it aimed to enhance efficiency and reduce risks, adoption was low. SEBI plans to expand this mechanism to the top 500 stocks in 2025.

Innovations in Payment and Settlement

SEBI proposed a Unified Payments Interface (UPI)-based block mechanism to secure client funds and directed brokers to charge fair fees. However, its plan to enable direct payouts of securities to client accounts faced technical issues and was temporarily rolled back.

New Mutual Fund Asset Class

SEBI introduced a new mutual fund category, bridging the gap between portfolio management services and alternative investment funds. With a minimum investment of ₹10 lakh, several fund houses are preparing to launch products in this space once guidelines are clarified.

Curbing Financial Misinformation

SEBI restricted registered entities from partnering with unregistered players to counter manipulation by financial influencers. These measures promote transparency and safeguard investors.

Boosting Consultation and Business Ease

SEBI codified a transparent consultation process for regulatory changes, making the rationale for decisions public. This move enhances trust and simplifies compliance for businesses.

NSE Colocation Case Settlement

SEBI closed the 9-year National Stock Exchange (NSE) colocation case, imposing a record settlement amount of ₹643 crore. The case highlighted the risks of unequal access to trading infrastructure and reinforced the need for safeguards to maintain fairness.

Controversies and Challenges

Chairperson Madhabi Puri Buch faced conflict-of-interest allegations due to her family’s consultancy business, raising questions about SEBI’s leadership. Additionally, staff protests against a “toxic work culture” disrupted daily operations, though SEBI later retracted its claims of external interference.

Looking Ahead

As Puri Buch’s term ends in March 2025, industry experts expect SEBI to continue with ongoing reforms. However, large-scale changes may take a backseat until clarity emerges on the leadership transition.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.