Market surge emphasizes importance of Sebi, SAT: CJI DY Chandrachud

Chief Justice of India (CJI) D.Y. Chandrachud on Thursday emphasized the importance of market regulator Securities and Exchange Board of India (Sebi) and its appellate body Securities Appellate Tribunal in view of the relentless surge in stock prices.

In May this year, the market capitalization of all the companies listed on the National Stock Exchange (NSE) exceeded $5 trillion ( ₹416.57 trillion), coinciding with the Nifty 50 index reaching a record high of 22,993.60.

This was followed by the historic 80,000-mark which the 30-share BSE Sensex achieved for the first time on 3 July. In the run up to this all-time-peak, the Sensex recorded its fastest 10,000-point rally, racking it up in just 58 sessions.

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“It gives you a sense of the market sentiment,” justice Chandrachud said, adding that it also “emphasizes the importance of regulatory authorities including Sebi and SAT; just tells that we are into wins, but it is equally important for others to hold their balance and nerves at such times.” He was speaking at the inauguration of a new office premises of SAT at Mittal Court, Nariman Point area of Mumbai.

Regulators like Sebi and appellate forums like SAT assumed immense national importance for fostering stable and predictable investment environment, he said.

“When investors feel assured that their investments are protected by law and that there are effective mechanisms for dispute resolution, they are more likely to invest in the country’s markets. This influx of investment can lead to better economic outcomes, such as increased capital formation, job creation, and overall economic growth,” the CJI explained.

He emphasized that lawyers and judges played a vital role in the regulatory domain in the securities market. When choosing the chairperson of SAT, a great of application of mind went into making the choice because at the highest level of government, there is a perception that it is a key tribunal in economic regulation, the CJI said.

“Therefore, it has to be a person, not necessarily someone who has practised securities law or presided over securities regulation cases, but has a robust understanding of the regulation. SAT is like a referee, ensuring that in the ‘dog-eat-dog’ world of finance, all stakeholders play by the rules,” he said.

The chief justice also highlighted that vacancies in SAT were required to be filled rapidly in light of the increase in the volume of disputes due to increased number of market participants and volume of financial transactions.

“The appeals filed before the SAT have increased manifold. In such a scenario, the vacancies in the SAT must be filled at the earliest to allow the tribunal to work effectively and at full capacity. It may be worth giving greater thought to the proposals of equipping the tribunal with additional benches and improved infrastructure to manage its escalating caseload,” he said.