Tuhin Kanta Pandey completed a year as chairman of the Securities and Exchange Board of India (SEBI) at the end of February. The milestone was marked by a series of media conversations highlighting a year of calm and stability, along with 58 regulatory changes, following the prolonged turmoil and controversy that surrounded his predecessor’s exit.
The claim is hard to dispute. Indeed, until the recent geopolitical tremors triggered by the Iran war, Indian markets had remained remarkably stable, despite foreign institutional investors (FIIs) pulling out approximately ₹5.32 lakh crore since late 2024 and the sharp end to the speculative bull run in small stocks.
And yet, ironically enough, the very first reform announced by chairman Pandey to restore SEBI’s credibility has still not materialised. Similarly, the boldest enforcement action initiated during his tenure remains unresolved.
Two Big Gaps: Conflict Code & Jane Street
Let us start at the beginning. In March 2025, Mr Pandey set up a high-level committee (HLC) to review conflict-of-interest rules, disclosures and ethical standards governing SEBI’s own leadership. The committee’s report was unusually candid in pointing out how SEBI’s top-4 officials had conveniently escaped the stricter rules that applied to other employees.
It recommended several far-reaching measures including: public disclosure of assets and liabilities by senior leadership; treating the chairman and whole-time members (WTMs) as insiders under SEBI’s own insider-trading regulations; tighter trading restrictions; and the creation of a whistle-blower mechanism along with an ethics oversight framework. (See: Probe the Sham Ethics Code: High-level Committee Exposes SEBI Top Brass’s Privileges)
A year into the chairman’s term, these recommendations remain under consideration, apparently because some insiders object to public disclosure of assets. While the issue is expected to come up at a forthcoming board meeting, the delay is awkward and illustrates a familiar pattern in India’s regulatory reform: when it comes to those in positions of power, fixing the system tends to slow down to a crawl.
If the conflict code is about credibility, enforcement defines authority.
SEBI’s most aggressive enforcement action ever, involving the high-profile US trading firm Jane Street, made global headlines. In July 2025, SEBI issued an interim order accusing the firm of manipulating settlement prices in the Bank Nifty index through complex strategies that combined cash and derivatives positions. The regulator barred the firm from Indian markets and ordered the impounding of roughly ₹4,800 crore in alleged unlawful gains.
While Jane Street issued the usual denials, it paid up the money with surprising alacrity and resumed trading. A regulator then told me, “We will all be watching (Jane Street) every day like a hawk.”(See: Jane Street and SEBI’s Moment of Regulatory Reckoning)
But SEBI has shown little urgency in issuing a final order, despite the significance of the case. India is now the largest derivatives market in the world by trading volume, fuelled by high-frequency trading and extraordinarily sophisticated algorithms. The inability to complete the investigation and deliver a timely final order sends a poor signal about regulatory accountability.
Meanwhile, derivatives trading itself remains a major regulatory challenge, even after the Union Budget attempted to dampen enthusiasm, particularly among retail traders, by increasing the securities transaction tax (STT) on futures & options (F&O) transactions. This was after several consecutive studies by the regulator showed that 90% of retail investors lost money in derivatives trading – an issue repeatedly highlighted by the SEBI chairman.
In the run up to this, SEBI, under Mr Pandey, had attempted to curb speculation through several incremental changes such as limiting the number of derivatives expiry days, tightening monitoring of intra-day positions and adjusting index composition rules to reduce the possibility of manipulation.
But, between the Jane Street episode and these regulatory curbs, the larger structural question remains unanswered: Has India’s derivatives market grown disproportionately relative to its underlying cash market? Or has the lack of market depth stunted the development of sectoral indices? The restructuring of key equity indices such as Bank Nifty, Bankex and Nifty Financial Services in November 2025 has indeed had a positive impact by reducing the concentration of trading in Bank Nifty.
Positive Strokes: Stability and Caution
Despite the unresolved issues described above, Mr Pandey’s first year has, indeed, ushered in a period of much-needed administrative calm by avoiding fast and furious regulatory changes or disruptive interventions, especially at a time when global markets have been repeatedly roiled by economic and political shocks emanating from the United States. The continued boom in successful listings through initial public offerings (IPOs) reflects this stability.
Another important decision is the no-objection certificate to National Stock Exchange’s (NSE’s) listing plans, pending for at least a decade. This happened after NSE’s new management sought an ‘amicable closure’ offered to pay a fat amount to settle all pending litigation, including an appeal before the Supreme Court.
If the process concludes successfully, it will finally bring closure to a long and messy chapter involving regulatory capture and SEBI’s failure to regulate and supervise a near-monopoly exchange effectively.
Well Begun—Half Done
Overall, Mr Pandey’s first year in office represents a job well begun. In his industry interactions and speeches, he has repeatedly emphasised that “market resilience cannot be ensured by the regulator alone; it is a shared responsibility among market infrastructure institutions, intermediaries, fin-tech innovators and all participants in the ecosystem.” His approach has been one of pragmatism and incremental reform.
He has also walked the talk on investor protection by acting against ‘finfluencer malpractice’ by launching Sudarshan, an artificial intelligence (AI)-based surveillance tool, removing over 120,000 misleading posts, in collaboration with social media platforms, and initiating action against a few high-profile trainers, influencers and television anchors.
But much remains to be done. The small and medium enterprises (SME) listing platform remains a hotbed of speculation and manipulation. While SEBI has acknowledged the risks, a comprehensive corrective framework is required.
Similarly, Mr Pandey’s emphasis on ‘optimum regulation’ must extend to the functioning of SEBI’s enforcement and investigation arms. SEBI’s orders have been repeatedly struck down by appellate bodies and the Supreme Court, due to procedural lapses, weak evidence, inordinate delays and occasional regulatory overreach.
An institutional mechanism requiring mandatory precedent audits, standardised evidentiary protocols and an independent enforcement review, complete with career consequences for officials found wanting, would go a long way in strengthening SEBI’s credibility.
A positive development in this direction occurred early in Mr Pandey’s second year. On 20th February, SEBI issued an internal order suspending general manager Achal Singh pending investigation into concerns related to vigilance and misuse of position. (See: SEBI Suspends Senior General Manager amid Integrity Probe)
Mr Pandey addressed the issue openly saying that SEBI will ‘get to the bottom of it’, noting that failure to act could ‘discourage officers who perform their roles with integrity’.
As Mr Pandey begins his second year as chairman, it is fair to say that he has fulfilled his primary objective of stabilising SEBI, rebuilding confidence and working toward what he calls ‘optimum regulation’.
But a chairman’s legacy is judged over the full term. That will depend on three things: introducing a credible code of conduct for SEBI’s leadership with the same zero tolerance on integrity that was applied to a general manager; ensuring enforcement consistency and timely closure of high-profile cases, such as Jane Street; and addressing structural issues in the market, such as the imbalance in derivatives trading, the development of a deeper corporate bond market, or genuine ease of doing business for intermediaries who play by the rules. It is a job well begun, but still half done. The harder part lies ahead.
How long does it take for a regulator in India to respond to bad practices? The answer: A staggering two decades of responding to alarms with pointless tinkering and directions.
On 11 February 2026, the Reserve Bank of India...
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