FM Sitharaman Calls for Anticipatory Regulation and Stronger Cybersecurity in Indian Markets

Addressing the gathering, Sitharaman highlighted SEBI's role in transforming Indian markets from trading rings and physical certificates to electronic order books and real-time supervision. "Periods of stress led to stronger regulation. Episodes of volatility led to stronger market infrastructure. That is how mature financial systems evolve," she said, noting that SEBI embodies this evolution through the discipline with which it has deployed its powers.

The Finance Minister cited SEBI's global leadership in market reforms, including the transition to the T+1 settlement cycle for all listed securities -- completed in January 2023, ahead of the U.S. shift in May 2024. She also pointed to the ASBA mechanism for IPOs and the UPI-based IPO application system, developed with NPCI, as innovations that have brought real-time retail participation to every smartphone. With NSDL and CDSL holding over $5 trillion in dematerialised securities, India now operates one of the world's most advanced depository infrastructures.

Sitharaman praised SEBI's institutional strength, noting its success rate of over 90% in the Supreme Court and 92 per cent in Civil Courts and NCLT. She highlighted that FY 2025-26 saw a record 366 IPOs raising around Rs 1.9 lakh crore, a testament to buoyant capital formation. While the retail participation revolution has democratised finance, she cautioned that "participation without understanding can create vulnerability. Access without safeguards can create risk." Investor protection, she said, must evolve from a defensive function into a developmental one.

Sitharaman stressed that SEBI must move beyond a reactive approach to become more anticipatory in regulation. She urged the regulator to institutionalise frequent consultations with global counterparts on issues such as cross-border fraud, AI in markets, sustainable finance disclosures and settlement interoperability. "Indian regulation need not be an imitation of global regulation. But it must be in sustained dialogue with it," she said, adding that greater global understanding of SEBI's frameworks would strengthen foreign investor confidence.

A key priority outlined was the simplification of KYC processes across the financial sector. Sitharaman called for a seamless, secure and portable KYC experience, urging SEBI to lead in prescribing common norms and driving digitalisation to eliminate repeated verification for citizens across multiple financial products.

On the bond market, she said SEBI must act as the convening force for structural reforms. Welcoming SEBI's October 2025 consultation on retail participation in corporate bonds, she said the regulator should drive standardisation in issuance documentation, strengthen secondary market liquidity and build a more effective credit enhancement architecture so that access extends beyond high-rated issuers. She also pushed for a serious push on municipal bonds, arguing that India's urban infrastructure cannot be financed sustainably through budgetary resources alone.

Cybersecurity emerged as the most pressing challenge. Sitharaman warned that a single successful cyberattack on a major exchange or depository could disrupt markets nationally and erode public confidence. With AI making cyberattacks faster and more adaptive, she said defence mechanisms must evolve even faster. She commended SEBI's Cybersecurity and Cyber Resilience Framework introduced in April 2025 and its Data Analytics and Digital Forensics Laboratory for using AI/ML to detect market manipulation and fraud. She also highlighted the "SEBI Check" tool for verifying intermediary payments and urged its expansion with greater public awareness campaigns in regional languages and rapid takedown mechanisms for fraudulent content.

Sitharaman said the journey towards Viksit Bharat requires deep, well-regulated capital markets, with SEBI playing an instrumental role. "But above all, we want better markets, not merely bigger markets. Size without integrity is fragility. Volume without investor protection is exploitation. Growth without governance is unsustainable," she said, calling it a shared national responsibility.

- ANI