Securities and Exchange Board of India Chairman Tuhin Kanta Pandey used his address at NDTV Profit Ignite: Diwali Edition in Mumbai on Wednesday to set out the regulator’s priorities: simpler regulation, deeper markets, stronger investor protection and smarter use of technology.
Pandey put equity market capitalisation at around Rs 470 lakh crore and mutual fund assets at about Rs 83 lakh crore, with more than 15 crore unique investors. “Scale is one measure. The real test is how well our markets finance the economy,” he said.
Here are the 10 key messages from his keynote and a later panel discussion.
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1. Direct plans become the default on fund house apps
“From November 1, direct plans will be the default option on digital platforms of AMCs. Investors choosing regular plans must be informed about their higher expense ratio,” Pandey said.
Direct plans carry no distributor commission, which makes them the lower-cost version of the same scheme. “Protection also depends on what investors are told,” he said.
2. AI is becoming SEBI’s watchdog
SEBI’s Radar tool, which checks mutual fund and distributor advertisements for compliance, will be extended to other intermediaries. The regulator is building an in-house system for AI-driven analysis of compliance reports from portfolio managers and AMCs. It is also piloting a tool that monitors disclosures by debenture trustees, stock exchanges, depositories and credit rating agencies to flag early signs of corporate debt defaults.
“Our objective is to make AI accessible, affordable, and secure, particularly for smaller regulated entities. To this end, we are exploring a domestically governed AI model for the securities market,” Pandey said. He had first raised the idea at a separate event earlier on Wednesday.
He was clear about where responsibility lies. “Artificial intelligence is changing financial services, but an algorithm cannot take responsibility. The institutions using it must remain accountable for outcomes and investor data.”
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3. Third-party checks on how IPO money is spent
“We are working on a system where third party monitoring agencies will check whether IPO funds are deployed for stated purpose,” Pandey said during the panel discussion.
The remark follows a consultation paper SEBI issued on October 13. It proposed making monitoring agencies mandatory for all public issues regardless of size, with fines and a possible freeze of promoters’ demat accounts for companies that fail to cooperate. Currently, monitoring by a SEBI-registered credit rating agency is required only when the fresh issue exceeds Rs 100 crore.
“Public capital brings public responsibility. Companies must be accountable for how they use investors’ money,” he said in his keynote.
4. IPO and SME rules up for review
SEBI will revisit the framework for main-board IPOs and follow-on public offers, and review listing and disclosure obligations. It is also reviewing the SME IPO framework and the Innovators Growth Platform, particularly for new-age companies, to improve access to public capital for growing businesses.
“A growing economy needs financing options for businesses of different sizes and at different stages of development,” Pandey said. The debenture trustee framework is under review as well.
5. Shell-like listed companies are a risk
In the panel discussion, Pandey flagged certain listed companies that carry out no economic activity, saying they act like shell companies and add risks to the market.
6. Closing auction stays, but not for derivatives settlement
“We have about three months of experience in the cash market, and it is working all right technologically,” Pandey said of the closing auction session.
Using the auction price to settle expiring derivatives was another matter. India’s derivatives market trades until the final second. During the auction, indicative prices are visible but no trades are executed, which created uncertainty for algorithms built on past market behaviour. Liquidity in an auction also takes time to build. “There was a real concern,” he said.
SEBI formalised the change in a circular on October 15. From December 7, expiring index and stock derivatives will be settled using the volume-weighted average price of the last 30 minutes of continuous trading. Pandey said the arrangement will be reviewed after a year.
7. Investors know about markets, but few understand them
“SEBI’s investor survey found that while 63% of households knew of at least one securities market product, only about 9.5% participated. Even among investors, just 36% had moderate or high market knowledge,” Pandey said. The survey, released in September 2025, covered more than 90,000 households.
“Our mobile phone is now a gateway to the market,” he said. “But easy access does not guarantee understanding. Investing must be a choice made with open eyes, knowing what you buy, what it costs, and what you risk.”
SEBI’s Project Jagruk awareness campaign runs in English, Hindi and 11 regional languages. Since its October 5 launch, it has drawn over 25 crore impressions and more than 18 crore views on social media.
8. A crackdown on those who mislead investors
“Awareness must be matched by action against those who mislead investors,” Pandey said.
SEBI has escalated more than 2.2 lakh instances of misleading online content to social media platforms for takedown. Its in-house AI tool, Sudarshan, accounted for over 40% of those escalations. In recent orders on unauthorised investment schemes and advisory activities, the regulator has directed entities to refund money collected from investors.
Tools such as SEBI Check, validated UPI handles and verified trading-app labels help investors identify genuine channels. “Yet a secure payment channel cannot tell you if an investment suits your needs. That requires knowledge,” he said.
9. A smoother path for foreign investors
“For foreign investors, we will keep simplifying the entire investment journey,” Pandey said.
About 585 foreign portfolio investors have used the Swagat-FI single-window route, accounting for roughly 15% of FPI assets under custody. SEBI is working with the Reserve Bank of India to harmonise SWIFT-based certification of KYC documents for FPI bank accounts. It is also examining longer KYC review cycles for eligible FPIs. “This will reduce repetitive compliance while preserving material change reporting and safeguards,” he said.
10. Deeper bond markets and wider financing choices
Outstanding corporate bonds stand at roughly Rs 61 lakh crore, a fraction of equity market capitalisation. “In corporate bonds, we are speaking directly with issuers about the hurdles they face,” Pandey said. SEBI is also consulting on fixed-income channel partners to take regulated online bond platforms beyond major cities.
He closed with a broader point. “India’s growth story is often told through big numbers, but what matters equally is how effectively we channel savings into productive investment and how confidently investors participate in our markets.”
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