Have to keep a watch on risks while supporting innovation, says Sebi official

At a time when development and innovation in the fintech space are bringing many newer players into the capital markets arena, the watchdog must perform a balancing act to encourage innovation while protecting the interests of investors by mitigating any risks associated with such development.  

Sebi whole-time member Amarjeet Singh, who is in charge of various departments including investigation, investment management, and legal affairs among other divisions, said that the regulator has to be “mindful” of the risks even as digitisation and artificial intelligence or AI offer huge opportunities for market players. 

“We are witnessing hyper digitisation and acceleration of AI and they present tremendous opportunities to the market players. We have to be mindful of the risks around these in terms of regulating these developments,” said Singh while speaking at the Global Fintech Forum here in Mumbai. 

“In terms of how regulators should handle innovation, we have to play a very fine balancing game,” he added. 

Singh, who assumed the charge of a whole-time member (WTM) on September 1, has spent nearly three decades with the regulatory body and has been part of many committees of Sebi and also that of the Reserve Bank of India (RBI) and the government as well. 

According to Singh, regulators have to allow innovation as they are important for the growth of not just the markets but the overall economy as well even while keeping an eye out for the risks. 

“Development of fintech products is very important for the growth of the economy so we have to support all the innovations that goes on in the financial sector. But at the same time, we have to be mindful of all the new products and new mechanisms and new ideas that come in the market. We have to keep a close watch on the risks around those products,” he said. 

He further said that the timing of the regulatory move is crucial as well as any delay could affect the interests of the investor community. 

“It is our mandate to protect the interests of the investors. We have to be careful at what time we step in. We cannot be too late as by that time the race to the bottom starts. At the same time, we have to calibrate our point of entry when a new innovation comes up,” he said. 

He highlighted the fact that the regulatory body has already put in place an innovation sandbox for entities that want to test their product or innovation in a market scenario. 

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