Madhabi Puri Buch's Three-Year SEBI Tenure: A Phase Of Bold Reforms And Challenges

The three-year tenure of Madhabi Puri Buch, the first woman chairperson of the Securities and Exchange Board of India, will conclude on Friday. The government has announced Tuhin Kanta Pandey as her successor, for a period of three years.

Buch's tenure as the chief of the markets regulator was punctuated by 180 consultation papers, market reforms and some tough love for her staff.

Usually in all her public appearances, Buch spoke highly of data over dogma, financial inclusion and above all, the welfare of small investors. Unlike a bureaucrat like her predecessors, Buch comes from a private sector background and believes in visual storytelling. Her style of public speaking involved visual aids which she displayed on a slideshow, the remote for which was always in her hand. This showed the level of precision in her explanation, the control for which was always with her.

It was in one such appearance back in August 2024 that she spoke about future and options trading volumes being too high. Post the Covid-19 pandemic, India had seen a surge in speculative trading among retail players, which posed serious risk to household savings.

Thereafter, Buch’s administration led a slew of reforms aimed at curbing excessive options trading. The restrictions included the limitation of weekly option expiries to one per exchange, along with a mandate requiring buyers to pay premiums upfront. The direct result of this, was that exchanges and brokers faced a revenue drop, as derivative trading volumes dropped.

During Buch’s tenure, initial public offerings in the Indian markets saw a boom, raising primary capital of Rs 1.6 lakh crore in 2024, setting one of the highest global record ever. However, this boom also demanded curbs on the IPOs of small and medium enterprises to protect retail investors from being lured by unrealistic projections by operators. The curbs came in December 2024.

Considering the IPO boom, the regulator also required a measure to expeditiously go through the DRHP documents of companies who wanted the regulator’s listing approval. Buch then made the announcement for using artificial intelligence to quickly go through IPO disclosure documents.

The use of AI and technology has not remained restricted to listing procedures, but also in insider trading and front-running investigations. These reforms also enabled stricter oversight of algorithmic trading by retail investors.

While the use of AI was aimed at making the regulator more time-efficient, Buch also actively advocated saving investors’ time by shortening the trade settlement cycle from T+2 to T+1 and then same-day settlements. The regulator also reduced the settlement time for IPOs from T+6 days to T+3 days.

The one reform that Buch seemed most excited about was the micro-systematic investment plan or 'Chota SIP' worth Rs 250 a month. While a final circular on the micro-SIPs is not out yet, a proposal was floated, following which, SBI mutual fund launched the initiative on Feb. 17.

Not all of what Buch wished for could be achieved in the last three years. Her plans to regulate the grey market and introduce a combo product of mutual funds and insurance are still pending.

During her tenure, she also had to face some professional demons. The chairperson faced a series of employee protests and criticism for being hard on retail investors. Three SEBI officials who worked with her called her integrity unquestionable. The three people spoke on condition of anonymity.

Buch is an honest person, but does not entertain fools. She may come off as curt sometimes, ruffling feathers and angering people along the way, one of the three people quoted above said.

Buch's style of working involved a lot of tough love, which may not have been appreciated by all members of the staff. But she could have better managed the disgruntled employees, another person quoted above said.

The extremely critical public lens on Buch was also likely a byproduct of her being a woman in a regulatory environment, which has typically been dominated by men, two of the three people said.

Another person who worked with her during her ICICI Group days said that Buch was extremely hard working, was intelligent and driven toward her work. She regularly worked long hours, focussed on getting the job done.

She was fueled by two things, data and an ambition to leave behind a legacy, the former ICICI Group person quoted above said. Buch once mentioned that when the data changes, she changes her view, showcasing a mindset which is open to new ideas, but bent on informed decision-making.