In a recent turn of events, Sandeep Parekh of Finsec Law Advisors has voiced disagreement with the Securities and Exchange Board of India's (SEBI) approach to defining 'market rumour'. This dissent comes in response to SEBI's release of a consultation paper on December 27, outlining proposed norms for the verification of market rumours by listed companies.
SEBI's proposed framework suggests that companies would be obligated to verify rumours only if there were significant movements in their share prices. Key officials, directors, and executives of the concerned companies would bear the responsibility of promptly verifying any rumours related to their organisations, as outlined in the consultation paper. Currently, Regulation 30(11) of the LODR Regulations mandates the verification of a market rumour within 24 hours of its appearance in mainstream media.
Expressing his reservations, Sandeep Parekh stated, "I don't agree with the approach at all. And if you look at the original comment, 75% of the people opposed to bringing this up quote US regulations, which are, in fact, an informal process of confidential treatment that they require, which is not mentioned there. So I think this is going to be quite, quite challenging for companies to implement."
Parekh's perspective finds support in the sentiments echoed by other industry experts. Abizer Diwanji of EY India, while acknowledging the necessity of regulating the spread of rumours in the age of social media, raised concerns about the practicality of SEBI's proposed micromanagement.
"First of all, I think as a concept, it's fine in the sense that with the kind of social media moves that happen, it's very easy to spread a rumour and somebody needs to have at least some kind of regulation or guidance as to how to control it. However, what I don't agree with—and I possibly agree with the other panelist—is the fact that trying to micromanage it is not going to work and I think that's the larger issue," Diwanji said.
The debate over SEBI's approach to defining and managing market rumours is expected to intensify as stakeholders from various sectors share their perspectives on striking a balance between control and practicality in the fast-paced world of financial markets.
For more, watch accompanying video
