Media365
India’s markets regulator has introduced a sweeping set of integrity and conflict-of-interest rules, including a two-year cooling-off period for former officials before they can represent clients in regulatory matters.
Under the new framework, former officials of the regulator will not be allowed to appear before it in investigations, settlement proceedings, or applications related to fundraising and regulatory approvals for two years after leaving office, according to a government notification.
The move is part of a broader effort to strengthen transparency, prevent potential conflicts of interest, and reinforce public confidence in the country’s financial market watchdog.
The regulator has also expanded restrictions on investments by employees’ family members and introduced stricter disclosure requirements for officials, according to the notification issued on Saturday.
The revised rules come after the regulator reviewed its internal code of conduct following conflict of interest allegations raised last year against former chief Madhabi Puri Buch by US-based short-seller Hindenburg Research.
Buch had denied the allegations, and India’s anti-corruption body later cleared her of wrongdoing.
The regulator’s board approved the updated rules last month, including a stricter voluntary code of conduct for senior officials.
Stricter post-employment rules
The new framework requires former officials to maintain a distance from regulatory matters involving the institution they previously served.
The two-year cooling-off period will prevent former employees from using their regulatory experience or internal knowledge to represent clients before the watchdog in sensitive matters.
Officials will also have to disclose any negotiations for future employment within 30 days of entering discussions with prospective employers.
The rules further require employees to recuse themselves from cases involving family members, close associates, or organisations linked to their previous professional relationships.
New curbs on investments
The regulator has tightened rules governing personal investments by its employees and their immediate family members.
Officials joining the regulator will have to liquidate or freeze equity holdings before assuming office, while employees serving at the regulator will not be permitted to trade in securities during their tenure.
For the first time, investment restrictions have been extended to family members, including spouses and dependent children, with limited exemptions for employee stock option plans and pooled investment vehicles.
The new framework also places limits on concentration risks. Employees cannot have more than 25 per cent of their total investments exposed to products offered by a single fund manager regulated by the market watchdog.
The restriction applies to investment products such as mutual funds, portfolio management services and alternative investment funds.
Strengthening regulatory credibility
The latest changes mark a significant revision of the regulator’s earlier 2008 code of conduct, reflecting the growing complexity of India’s financial markets and the need for stronger safeguards.
As India’s capital markets expand, with increasing participation from retail investors, domestic institutions and global funds, maintaining regulatory independence has become a key priority.
The regulator oversees stock exchanges, listed companies, mutual funds, brokers and other market intermediaries, making its internal governance framework critical for investor confidence.
The new integrity framework aims to create clearer boundaries around officials’ investments, employment transitions and professional relationships while reducing the risk of perceived or actual conflicts of interest.
With inputs from agencies.
