Trade Deals Reduce Uncertainty and Boost Capital Formation, Says Sebi Chairman

End of Trade Frictions Can Spur Investment Decisions​

Securities market regulator Securities and Exchange Board of India Chairman Tuhin Kanta Pandey on Wednesday said that the easing of trade frictions through international trade agreements, including the recent deal with the United States, plays a critical role in removing uncertainty from the investment environment and accelerating capital formation in the country.

Responding to queries on whether such trade arrangements could encourage higher foreign capital inflows, Pandey noted that the removal of regulatory and trade-related overhangs helps investors take clearer and faster investment decisions. According to him, greater predictability around policy and capital flows creates conditions that are conducive to long-term capital formation.

Predictability Key to Accelerating Capital Formation​

Pandey explained that uncertainty often delays investment decisions, and once these uncertainties are resolved, capital formation tends to accelerate naturally. With trade-related ambiguities being addressed through recent agreements, he said the overall investment climate stands to benefit.

He added that trade-side developments have contributed to improving confidence by reducing unknown variables that investors typically factor into their decisions.

No Immediate Changes Planned on Derivatives or Weekly Expiry​

Speaking on the sidelines of a conference focused on strengthening the corporate bond market, Pandey declined to comment on the government’s proposal to raise the securities transaction tax on derivative trades. He clarified that the regulator is not considering any new measures at this stage and that the existing regulatory framework will continue.

On the issue of weekly expiry contracts, Pandey reiterated that the regulator is maintaining the status quo and is not contemplating a ban or structural changes to the current system.

Corporate Bond Market Needs Wider Participation​

Highlighting the need to deepen India’s corporate bond market, the Sebi Chairman pointed out that investor awareness remains a challenge. Citing a regulator-led survey, he observed that more people are aware of cryptocurrencies than corporate bonds, underscoring the need for stronger outreach and education.

While acknowledging the steady growth of the bond market over the past decade, Pandey stressed that further progress depends on expanding participation beyond top-rated issuers. He emphasised the importance of encouraging public bond issuances, attracting companies outside the financial services sector, and broadening the issuer base.

Sebi, he said, has adopted an approach of optimum regulation for the bond market and called on all stakeholders to work together to achieve the goal of a deeper and more resilient corporate bond ecosystem.

Proposal to Push Bond Market Fund Raising​

At the same event, BSE Managing Director and Chief Executive Sundararaman Ramamurthy suggested mandating the use of the corporate bond market through public issues for fund raising beyond a specified threshold. He also proposed tax incentives to encourage more issuers to adopt the bond route.

The conference, organised in association with National Stock Exchange of India, saw market participants align around the theme “Bonds Ek Sashakt Bandhan,” reflecting a collective intent to strengthen communication and adoption of corporate bonds as a key financing instrument.