- The Indian market is not limited by sector
- IOSCO is made of over 100 members
- Business responsibility guidelines the Top 100 Listed Companies Report
INTERVIEW TRANSCRIPTS: U.K. Sinha, Chairman of SEBI and David Nelson
David Nelson – Host, Traders Network Show:00:00
Welcome back. I’m David Nelson, host of the Traders Network Show broadcasting worldwide from the floor of the New York stock exchange for iHeart radio and Equities.com. We’re here for an event being hosted by the United Nations sustainable stock exchanges initiative and my next guest is Mr. Sinha, chairman of the securities and exchange board of India or SEBI. Mr Sinha, thank you so much for being with us, sir. There’s been explosive growth in the markets of India and many investors think this is going to be an engine of growth for the world and for where people are going to want to invest. How are you going to keep on top of that? How do you maintain that growth in the coming year?
U.K. Sinha – Chairman of SEBI: 00:40
The Indian market has one basic advantage that our economy or our market is not confined to one particular sector. For example, the services sector, the agriculture sector, the manufacturing sector, they are all there in quite large percentages which means that if there is any global problem with regard to one particular sector, we are reasonably insulated because we are, we have hedging because of the variety of activities which are taking place in our country and secondly, Indian economy today is more than $2 trillion. The market is around $1.8 trillion so we are fairly large on PPP basis. The Indian economy is number three in the world and we are growing at more than 7% for last so many years.
David Nelson – Host, Traders Network Show:01:12
That’s an enormous number of 7% is one you don’t hear very often. So in essence for an investor going into India, there’s a natural diversification taking place.
U.K. Sinha – Chairman of SEBI: 01:33
For a foreign investor going into India. I’ll have three points to make. One is the size of the market and the size of the economy and the second is the risk returns, which the market has been giving. For example, the benchmark index in India, which is called Sensex. Another one is called Nifty, over a long-term period. It has given a return compounded annual growth rate of more than 15%. Very few countries can think of that. So that the second part, and the third part is the regulatory environment. And I would like to inform you that the regulatory environment in India is in some way ahead of the rest of the world. For example, we have since last 20 years or so, we have organized screen-based trading. We have decimated realization of shares and the corporate loan and norms in our country are one of the best in the world. We have been rated, India has been rated by the world bank in corporate governance and shareholder protection. Our ranking is number seven from the top.
David Nelson – Host, Traders Network Show: 02:06
Number seven. Wow. You know, I think our viewers would like to know something about you. You have another role. Many people don’t realize that you’re also on the board of IOSCO, which stands for the international organization of securities commissions. Kind of like our SEC, how many members of IOSCO other now?
U.K. Sinha – Chairman of SEBI: 03:01
IOSCO has more than 100 members today.
David Nelson – Host, Traders Network Show: 03:01
100 members. That’s an enormous responsibility.
U.K. Sinha – Chairman of SEBI: 03:05
It has an executive committee, so India, US and a few other countries. We are on the executive committee of IOSCO where the major decisions are taken.
David Nelson – Host, Traders Network Show:03:16
Let me bring it back to the event here. How does the sustainable stock exchanges initiative and the activities that they all have over the next one, two and three years, how would that integrate with your organization and what you’re like to like to accomplish?
U.K. Sinha – Chairman of SEBI: 03:27
I would first of all like to compliment the UN agencies for having thought of this initiative about five or six years back and they have been able to create this environment that sustainability is not an issue which can be wished away. It has to be done. So now today we are in a situation where we are going to the next level and that is how to do it. I like to inform you for example in India, SEBI my organization as the regulator of the securities market, we have provided what is called the business responsibility report guidelines. So top 100 companies of the country, which listed on the stock exchange, they have to report on an annual basis. What are the measures they have taken on sustainability for example unemployment matters on greenhouse gas emission matters, how much discharge they’re making while much affluent they are throwing up, all those things are reported. We have not gone to the level and I personally am not in favor of it, of also monitoring that and putting a quantitative restriction on that. Our idea is that we are reporting once the reporting takes place, the rest of the world, including the investors that you have in mind, especially the institutional investors, then they can take a call.
David Nelson – Host, Traders Network Show: 04:41
What percentage of the companies on the exchange or endorsing those policies that you’re putting forth?
U.K. Sinha – Chairman of SEBI: 04:46
As I said, we have started it as a mandatory measure for reporting for top 100 companies. This would be easily about 50% of the market capitalization, total market capitalization of the country.
David Nelson – Host, Traders Network Show: 04:59
Well said, sir. Any final words for the UN and the SSE, they’re launching their sustainable development goals. Anything you’d like to say to them?
U.K. Sinha – Chairman of SEBI: 05:08
No, I wish them all the best. This is a very well thought out and timely initiatives and I think the way forward is that we should go into a softer way of regulation rather than starting something uniformly for everybody. Because there are big companies, there are smaller companies. So once you’d go in a software way, and I think that is the way India has gone, that is the way London has gone. That is the way European union has gone. So I think we should be going in that direction.
David Nelson – Host, Traders Network Show: 05:38
Okay. Thank you. We’ll leave it there. Thank you very much for being with us. That was mr Sinha, chairman on the Securities and Exchange Board of India. By the way, a quick thank you goes out to 1-800-PublicRelations for all the PR media support. Thanks for joining on David Nelson at the New York stock exchange.