SEBI Board to Consider Panel Report on Disclosures and Conflict of Interest

Context:

• The Securities and Exchange Board of India (SEBI) will take up a high-level committee report on conflict of interest and disclosure norms at its next board meeting scheduled for December 17.

• The move comes amid efforts to strengthen transparency, accountability, and ethical governance in India’s securities market regulator.

Key Highlights:

Institutional & Governance Developments

• The expert committee was constituted in March 2025 following allegations involving former SEBI Chairperson Madhabi Puri Buch.

• The panel examined gaps in ethical safeguards, disclosures, and conflict-of-interest management within SEBI.

Key Recommendations of the Panel

• Introduction of a multi-tier disclosure regime for senior SEBI officials.

• Mandatory public declaration of assets and liabilities by top functionaries.

• Clearer norms to identify, disclose, and mitigate potential conflicts of interest.

Investor Participation Snapshot

• 63% of households are aware of securities markets, but only 9.5% actually invest.

• As of October 2025:

  • 13.6 crore investors

  • Over 21 crore demat accounts

• Around 1 lakh demat accounts opened daily, indicating rising retail participation.

Market Growth Indicators

• Mutual fund industry assets have grown seven-fold in the last decade, reaching ₹80 lakh crore.

• Reflects increasing confidence in Indian capital markets, necessitating stronger regulatory credibility.

Relevant Prelims Points:

• Issue: Ensuring integrity and ethical governance within market regulators.

• Causes:

  • Allegations of conflict of interest

  • Expanding market size and complexity

• Key Institutions:

  • SEBI – capital market regulator

  • High-level expert committee (2025)

• Key Concepts:

  • Conflict of Interest: Personal interests affecting impartial decisions

  • Disclosure: Transparency through mandatory information sharing

  • Demat Account: Electronic holding of securities

• Impact:

  • Improved trust in regulatory institutions

  • Greater investor confidence

Relevant Mains Points:

• Governance & Regulatory Dimensions:

  • Strong disclosures are essential for regulatory credibility

  • Multi-tier disclosure aligns with principles of good governance and accountability

• Economic & Market Perspective:

  • Rising retail participation heightens the need for robust oversight

  • Ethical lapses at regulatory level can undermine market stability

• Investor Protection Angle:

  • Transparency at the top encourages broader investor participation

  • Helps bridge the gap between market awareness and actual investment

• Way Forward:

  • Implement panel recommendations with legal backing

  • Periodic review of disclosure norms

  • Enhance investor education alongside regulatory reforms

UPSC Relevance (GS-wise):

• GS 2: Governance, Regulatory Institutions, Accountability

• GS 3: Economy, Capital Markets, Financial Regulation

• Prelims: SEBI, Conflict of Interest, Demat Accounts