Functional autonomy for regulators is important for the smooth conduct of markets, Securities and Exchange Board of India's chairman M Damodaran said on Thursday.
Delivering JRD Tata memorial lecture, Damodaran stressed that strengthening of the regulators and appointing key resources was critical for the development of the market. “The regulators need functional autonomy and financial autonomy.”
In addition it is important to define the reporting structure of regulators so that they stay independent, said the chairman. Citing the case of public sector undertakings, he said there were “perception problems” because PSUs are owned by the government.
Damodaran said regulators reporting to the parliament or its standing committee or the administrative ministries made a difference in terms of perception on their independence.
After the Companies Amendment Bill is passed in the parliament, it would supersede the clause 49 of the stock listing agreement under which it is mandatory to have 50 per cent independent directors on the board of any company. The new amendments suggest 33 per cent reservation for independent directors.
On the issue of volatility in the market, the market watchdog said that he is not too worried about volatility. “At the end of the day, markets are up or down depending on how many have bought shares and how many sold them and at what prices,” he said.