Regulators should be able to reduce systemic risk, which is a concern across the world. They have to work towards building consumer confidence, according to the SEBI Chairman, Mr U.K. Sinha.
He said that the regulation should be guided by public policy, legal system and international developments and pressures. Response of the larger political system to a market misconduct is important in shaping regulation.
The SEBI Chairman said that the European crisis can cause pressure on fiscal situation in India. FII flows have come down, which could put pressure on asset prices. There are indications of stress on asset quality in the banking sector.
There should be a good mechanism for a co-ordinated action among regulators and the government, which is the need of the hour. There should be a stress-testing of regulatory architecture, and SEBI has already started the exercise, he said.
Stating that the IPO listing day volatility was under SEBI's scanner, Mr Sinha said the entire initial public offer process was being reviewed.
He added that there was a need to review high statutory costs and levies on stock exchanges.