Stringent regulatory actions arising from the growing frauds in the BFSI space should give retail investors confidence that regulators are watchful like hawks in safeguarding their interests, said Sundararaman Ramamurty, MD & CEO of BSE at FE’s Modern BFSI Summit.
“Regulatory actions should give confidence to investors that there is a regulator who is watching like a hawk to see that there is no malpractice happening in the market and therefore they will be safeguarded,” Ramamurty said.
He said that the regulatory actions stem from the sector’s rapid growth, which also increases the likelihood of various forms of fraud.
With such increasing frauds, regulatory actions certainly have to be stringent to ensure there is control, Ramamurty said.
“Growth can be cancerous but development is always positive. So when growth happens, regulators will be worried that it should not be cancerous but development, so naturally, there will be regulatory actions,” he said.
However, he said that investors who rely on hearsay stock tips based on short-term returns should be worried as their interest can never be protected by the regulators. At such a time, retail investors cannot ask regulators to protect them when they did not protect themselves, he said.
Retail investors have always played a significant role in the market, constituting a large portion due to certain restrictions placed on domestic institutional investors (DIIs), foreign institutional investors (FIIs), and proprietary traders.
For example, DIIs and FIIs cannot buy and sell the same scrips on the same day, limiting their activity in the market.
These sections, he said, are easy to classify and the rest gets loosely classified as retail investors. He clarified that retail investors are a heterogeneous mix of people including very high net worth individuals and very very small people who do one trade at a time.
He said the stability and resilience in the banking and financial services space has helped speed up settlement cycles in the market from T+5 to T+0.
