Finance ministry invites applications for Sebi chief as Madhabi Puri Buch’s term nears end | Stock Market News

The Ministry of Finance’s Department of Economic Affairs has invited applications for the post of chairperson of the Securities and Exchange Board of India (Sebi) as the term of the current chair Madhabi Puri Buch is set to end on 28 February.

Appointed in March 2022, Buch is the first woman to head the market regulator, besides being the first Sebi chairperson who was not an officer of the Indian Administrative Service (IAS).

A finance professional with over three decades of experience, Buch began her career at ICICI Bank Ltd, where she rose through the ranks, eventually becoming the executive director. Her career also included roles in private equity and at the New Development Bank in Shanghai, giving her valuable global exposure.

Achievements and reforms

As Sebi chief, she focused on modernizing India’s securities market, enhancing transparency, investor protection, and reducing market manipulation. Under her leadership, Sebi has overhauled regulations to improve market practices and disclosures by listed entities.

Experts believe that Buch’s tenure as Sebi chairperson will be remembered for transformative initiatives that strengthened the integrity and efficiency of India’s financial markets. As Sebi’s first woman chairperson, she broke barriers and set a precedent for diversity in leadership within India’s financial regulatory system, according to Zubin Morris, partner at Little & Co.

Buch’s time in office also saw a focus on technology and data analytics to improve regulatory oversight, ensuring more evidence-based interventions in market operations. The emphasis on technology helped Sebi enhance its ability to monitor and regulate financial markets effectively.

Under her leadership, Sebi introduced several measures to improve liquidity in the debt securities market. The regulator reduced the timeline for listing debt securities from six working days after the issue closed (T+6) to working days (T+3). The regulator also established the Corporate Debt Market Development Fund (CDMDF) to purchase investment-grade corporate debt securities during times of market stress. Additionally, Sebi revised regulations governing credit rating agencies, aiming to enhance the accuracy and reliability of debt instrument ratings.

Buch-led Sebi also took measures to reduce volatility in the derivatives market and protect retail investors. Sebi increased the position limits for trading members in index contracts to ₹7,500 crore or 15% of the total open interest in the market, whichever is higher. The regulator also increased the minimum derivative contract size to ₹15 lakh crore, reduced the number of weekly expiries, and raised margin requirements. Sebi implemented upfront collection of premiums, removed calendar spread benefits, and intensified intraday monitoring of position limits.

Another significant initiative during her tenure was the enhanced due diligence requirements for alternative investment funds (AIFs), which left industry stakeholders divided. While some saw the tighter measures as necessary for investor protection and market integrity, others caution additional compliance burden could discourage large investors seeking flexible structures. 

For startups, Sebi also proposed changes to the regulatory framework governing angel funds like reducing minimum investment threshold per startup from ₹25 lakh to ₹10 lakh, and halved the lock-in period from one year to six months.

Sebi also took stronger actions against insider trading and market malpractices by imposing stringent rules forcing asset management companies to bolster surveillance and internal controls and expanding the definition of unpublished price-sensitive information under the Prohibition of Insider Trading (PIT) Regulations.

Buch also oversaw introduction of small and medium REITs (SM REITs) with a minimum asset value of ₹25 crore, down from the previous minimum asset value of ₹500 crore for existing REITs. This move was seen as a way to make REITs more accessible to smaller investors. 

Market and legal experts pointed out that Buch remains eligible for reappointment as Sebi chairperson as she meets the criteria specified in the relevant notification. They also cited Modi-led government’s preference for continuity, as shown by reappointments to key ministerial positions in sectors such as finance, defence, external affairs, and road and transportation.

“However, in Buch’s case, the position is not political or ministerial,” said Kunal Singhania, partner at Singhania. “While the government has been proactive in reappointing ministers despite criticism, Buch’s reappointment will be under different scrutiny.”

Singhania said her reappointment would signal strong confidence in her leadership and policies, while a new appointment might suggest a desire for fresh perspectives in navigating regulatory challenges.

Morris explained that previous Sebi chairpersons, such as Ajay Tyagi, received six-month extensions before their terms officially ended, though this remains at the government’s discretion. “If the government sees her contributions aligning with Sebi’s future vision, an extension could be considered, especially if a suitable successor is not identified or if continuity is crucial.”

Buch’s tenure, however, has been marred by controversies. One major issue was Sebi’s handling of the Adani Group following accusations by US-based short-seller Hindenburg Research of stock manipulation and accounting fraud in 2023. Under her watch, Sebi faced allegations of delayed action and failing to adequately oversee the group’s activities. Congress leader Pawan Khera also raised concerns about Buch’s compensation from ICICI Bank, accusing her of holding an office of profit and receiving substantial benefits from the bank post-2017. Buch denied the allegations.

Hindenburg Research had also claimed that since Buch became chairperson in March 2022, Sebi had proposed and implemented several regulations related to real estate investment trusts (Reits) that notably benefited Blackstone, one of the largest Reit sponsors in India with which her husband, Dhaval Buch, is affiliated. Buch denied these allegations too.

Internally, she faced protests from the regulator’s employees over working conditions and the effectiveness of the organization’s management system for performance evaluation. While Sebi initially attributed the protests to external influences, it later withdrew this statement after employees staged a silent protest.