* Economist, Monetary Research Project, ICRA Limited.
Increased integration of India's capital markets with global markets implies that the state of the regulatory environment in the Indian securities market is now of relevance to both domestic (particularly, retail) investors as well as NRIs/foreigners tapping the Indian financial market.
The purpose of this study is to take stock of the regulatory infrastructure of the Indian securities market and see whether there exist well-formulated laws with well-defined scope and powers of the regulator, capable of presenting all investors in the Indian market with a level playing field. We summarise some of the regulatory provisions that have evolved for tackling market misconduct and try to see what comes in the way of regulatory action aimed at investor protection in India, as compared with the US which is perceived as the world's most safe and liquid capital market. We also discuss the roles of the stock exchanges and electronic databases in aiding the regulator in prevention, detection and conviction of securities frauds. One tends to conclude that the scope of Indian securities laws, which have gradually evolved over time, is now quite pervasive and the problem lies mostly in enforcing compliance particularly for crimes such as price manipulation and illegal insider trading. Our discussion suggests that there remains a need to ensure that laws/regulations are rationalised to completely empower SEBI to carry out its functions as the principal regulator, while SEBI in turn needs to drastically upgrade its surveillance process enabling it to produce evidence that is credible enough to secure conviction.
