Indian Govt Agreed To Set Up Panel To Strengthen Mechanisms For Stock Market 

In the wake of the recent stock market crash caused by allegations of fraud made by Hindenburg Research, the Supreme Court proposed on Monday that a panel of experts be formed to examine ways to strengthen the regulatory framework for the stock market. The Centre accepted this proposal on Monday.

The Securities and Exchange Board of India (SEBI), the country's market regulator, and other statutory bodies are "fully equipped" to deal with the issue, the Centre said while stating that it has no objections to the panel's formation. Additionally, it requested the right to submit information under a "sealed cover," including names and the scope of the panel's mandate.

In light of the fall in Adani share prices, the top court stated on Friday that Indian investors' interests need to be safeguarded against market volatility. It subsequently asked that the Centre consider forming a panel of subject matter experts under the direction of a former judge to examine ways to strengthen the regulatory framework.

Solicitor General Tushar Mehta informed the court, which was hearing two PILs alleging the "artificial crashing" of the Adani Group's stock price and the exploitation of innocent investors, that the Centre was in favour of the recommendation as it was made by the court.

Mehta however stated to the bench that the "remit" of the proposed committee would be relevant because any "unintentional" message to investors that these regulatory bodies needed to be monitored by a panel may have some adverse effects on the flow of money into the country. The bench also included Justices PS Narasimha and JB Pardiwala.

The top law officer opened the meeting by saying, “I have instructions that the SEBI and other agencies are fully equipped, not only regime wise, but otherwise also to take care of the situation. However, responding to the suggestion which fell from the court, the government has no objection to constituting a committee.” “But the remit of the committee would be very relevant because any unintentional message to international investors or domestic investors that the regulatory authorities need a monitoring by the committee may have some adverse impact on the flow of money,” 

He said that as it might not be suitable to discuss them in open court sessions, the Center may be permitted to recommend names of people of "some calibre" as well as the scope of the proposed committee in a sealed cover.

The two PILs were subsequently scheduled for further hearing on February 17 after the bench ordered the law officer to provide the note by Wednesday.

Since the country's capital movement is now "seamless," the top court also sought the SEBI and the Centre's opinions on how to ensure that a strong framework is put in place.

It stated that the stock market is not just for high net-worth investors, adding that due to the evolving financial and tax environment, investments are now being made by “ the wide spectrum of middle class.”  It had stated that some sources indicated that Indian investors have lost a total of several lakh crores of rupees as a result of the recent decline in Adani stock prices.

The bench had proposed a committee to address the issue of enhancing the current regulatory regime, which might include specialists from the securities fields, the international banking industry, and a “wise guiding figure in the form of a former judge”.