Enhancing Stability in Equity Markets: CJI’s Call for Caution and Expansion

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In a recent event on July 4, 2024, Chief Justice of India D Y Chandrachud advised market regulator SEBI and the Securities Appellate Tribunal (SAT) to exercise caution amidst a significant surge in equity markets. He emphasized the need for stability in the backbone of the financial sector, calling for more tribunal benches to handle the increased workloads resulting from higher transactions and newer regulations.

CJI Chandrachud highlighted the crossing of the 80,000 points milestone by the BSE as a momentous occasion, signaling India’s entry into a ‘stratospheric domain’. He stressed the importance of regulatory authorities ensuring that all market participants maintain their balance and nerves during such high points in the stock market.

The role of SEBI and SAT, according to the Chief Justice, is of immense national importance in fostering a stable and predictable investment environment. By providing investors with the assurance that their investments are protected by law and there are effective dispute resolution mechanisms in place, the market can attract more investments, leading to increased capital formation, job creation, and overall economic growth.

With the financial landscape evolving rapidly, the CJI highlighted the need for SAT to act as a referee in the competitive world of finance, ensuring that everyone adheres to the rules. He also pointed out the surge in market participants and transaction volumes, which could result in more disputes and instances of regulatory non-compliance.

Moreover, the increase in appeals related to market conduct and corporate governance necessitates the prompt filling of vacancies at SAT to ensure smooth functioning of the tribunal. CJI Chandrachud advocated for the creation of more SAT benches to handle the growing workload effectively and efficiently.

The timely actions and correction of aberrations are crucial in the financial sector, as emphasized by the Chief Justice. He underscored the need for a robust approach to regulation in selecting individuals to lead institutions like SAT, highlighting their key role in economic regulation at the highest levels of government.

In conclusion, CJI Chandrachud’s call for caution and expansion in the equity markets aims to enhance stability and promote growth in the financial sector. By advocating for a stable backbone, effective resolution mechanisms, and updated regulatory practices, the Chief Justice envisions a thriving investment environment that fuels economic progress and development.