Market regulator SEBI is in the final stages of developing a Standard Operating Procedure (SoP) for handling settlement cases, aiming to establish a uniform approach and enhance transparency in the process, said whole-time member Kamlesh Chandra Varshney on Sunday.
“We are working on an SoP to standardise how we proceed with different types of settlement cases. It is nearly complete. SEBI is also looking at developing a formula for settlements,” Varshney stated at a conference on the economics of competition law, organised by the Competition Commission of India (CCI) in the capital.
The proposed SoP is expected to make the settlement process more predictable, reduce discretion, and ensure fairer outcomes for both the regulator and market participants.
SEBI’s settlement experience
Varshney highlighted SEBI’s experience with settlement cases, noting that the mechanism has been successfully in practice for 18 years. He pointed out an interesting aspect of SEBI’s approach—settling cases often results in higher payments than litigation.
“Five years ago, only 10 per cent of our enforcement orders went for settlement. Today, 45 per cent of them are being settled,” he said.
- Also read: SEBI plans higher penalties for algo, high-frequency traders
He underscored the importance of settlements in easing the burden on regulatory bodies. “Imagine if this 45 per cent were not settling but going to SAT (Securities Appellate Tribunal), where over 1,000 cases are already pending. Currently, our disposal rate is 45 cases per month.”
To improve efficiency, SEBI has now set a target of resolving 60 cases per month in the next fiscal year. “When we started 2024-25, our monthly case intake was 40. It has now increased to 60. So, we aim to match this inflow with an equal outflow,” Varshney added.
Under the SEBI (Settlement Proceedings) Regulations, 2018, individuals and entities can resolve securities law violations by paying a settlement amount and agreeing to remedial measures.
Need for a SoP
SEBI has seen a growing number of settlement applications in recent years, as businesses and market participants seek faster resolution of regulatory matters. However, the absence of a standardised framework has sometimes led to delays and inconsistencies in handling similar cases.
By introducing a SoP, SEBI aims to enhance market integrity while improving regulatory efficiency, ensuring that violations are addressed swiftly and fairly.
