Mumbai (Maharashtra) [India], November 12 (ANI): A high-level committee set up by the Securities and Exchange Board of India (SEBI) has proposed a major overhaul of the regulator’s ethics and conflict-of-interest framework to strengthen transparency, accountability, and governance standards.
The High-Level Committee (HLC), chaired by former Chief Vigilance Commissioner Pratyush Sinha, recommended moving from a voluntary code of conduct to a legally enforceable framework, aligning SEBI’s governance practices with international regulatory standards.
“The recommendations for SEBI Board Members may be implemented by notifying a separate set of Regulations for SEBI Board Members for Disclosures and Management of Conflict of Interest. This would make it legally enforceable, unlike the current Code, which is more akin to voluntary adoption,” the report stated.
The panel highlighted gaps in the current system, including inconsistent definitions of terms such as “family,” “relative,” and “conflict of interest,” confidential disclosures that are not substantively reviewed, and the absence of an independent ethics office. It proposed a digital registry to record and track all conflict-of-interest declarations.
The HLC suggested establishing an Office of Ethics and Compliance (OEC), led by a Chief Ethics and Compliance Officer (CECO) at the Executive Director level, supported by an Oversight Committee on Ethics and Compliance (OCEC). These bodies would oversee recusals, conduct ethics audits, and review compliance cases.
The proposed framework includes uniform definitions and robust disclosure norms, investment restrictions and stricter gift and post-retirement rules, structured recusal processes, public transparency, and institutionalized ethics oversight.
The Committee concluded that SEBI’s current framework is inadequate and that adopting these reforms would enhance public trust, strengthen SEBI’s reputation, and reinforce its independence and integrity as India’s capital market regulator.
The HLC, formed in March 2025, included former regulators, public officials, and industry leaders. Its mandate involved reviewing SEBI’s policies, benchmarking against global regulators like the US SEC, UK FCA, Germany’s BaFin, Australia’s ASIC, Singapore’s MAS, and Indian institutions such as RBI, IRDAI, PFRDA, and IFSCA, while also consulting stakeholders including former SEBI leaders, legal experts, journalists, market intermediaries, and regulated entities. (ANI)
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