Interconnected markets need unified vigilance: SEBI

Capital flows are increasingly blurring the lines between financial markets, raising the risk of shocks spreading from one segment to another, thus calling for closer coordination among regulators, Securities and Exchange Board of India (SEBI) Chairperson Tuhin Kanta Pandey said on Wednesday.

Speaking at the Banking and Economics Conclave organised by the State Bank of India (SBI) in Mumbai, Pandey said the traditional boundaries separating banks, capital markets, insurers and other financial institutions were becoming less distinct.

“Mutual funds and insurers invest in securities issued by banks and corporates. Banks also participate in capital-market activities,” he said, highlighting the growing interconnectedness of the financial system.

According to Mr. Pandey, the movement of capital across markets has increased the possibility that risks emerging in one area could quickly spill over into another. A disruption in one segment, therefore, cannot be addressed in isolation by a single regulator or institution.