The Securities and Exchange Board of India (Sebi) announced a major reduction in routine inspections of market intermediaries, cutting them by two-thirds starting this fiscal year. The regulator will now focus on a risk-based supervisory model that prioritizes firms flagged for potential violations, easing compliance burdens for well-governed entities, according to livemint.com.
Sebi’s revamped inspection framework covers stock brokers, depository participants, investment advisers, and research analysts. The regulator said the changes aim to improve regulatory efficiency and reduce duplication in supervisory processes. This shift follows consultations with market infrastructure institutions to better allocate inspection resources and enhance oversight of high-risk players, as reported by livemint.com.
This move marks a significant change in India’s market regulation approach, aligning with global trends toward risk-based supervision. By concentrating on entities with higher risk profiles, Sebi expects to enhance market integrity while reducing unnecessary compliance costs for low-risk intermediaries. The new framework contrasts with the previous regime, which involved routine checks of all intermediaries regardless of their risk status, according to thehindubusinessline.com.
Sebi’s decision to reduce routine inspections to one-third of last year’s volume was announced on August 7. The regulator emphasized that this approach will allow more focused scrutiny of high-risk intermediaries, aiming to strengthen investor protection and market stability, livemint.com reported.