Speaking at the IMC Capital Market Conference 2026, Mr Pandey says Reserve Bank of India (RBI) and Insurance Regulatory and Development Authority of India (IRDAI) have reservations about permitting banks and insurers to enter the segment.
“Banks and insurance companies — the respective regulators are not very favourably inclined to allow them to invest in commodity derivatives, and they have some valid rationale for it,” he says during a fireside chat.
Mr Pandey indicated that concerns stem partly from the nature of these institutions, particularly insurance companies, whose long-term liabilities may not align with the relatively volatile and short-term characteristics of commodity derivatives. He added that India’s pension regulator has also examined the issue, though he did not clarify whether any final decision has been taken.
The comments come at a time when market participants have been pushing for broader institutional participation in commodity derivatives to improve liquidity and price discovery. However, the lack of alignment among financial regulators remains a constraint.
Providing an update on regulatory infrastructure, Mr Pandey says work is underway on CKYC (Central know-your-customer) 2.0, a unified know-your-customer framework being developed by the Central Registry of Securitisation Asset Reconstruction and Security Interest in consultation with regulators. He expressed hope that a framework for the initiative could be ready by the end of July.
In his keynote address, Mr Pandey placed the issue within a broader macro-financial context, noting that global geopolitical tensions, particularly in West Asia, have underscored the interconnected nature of markets. “Markets do not function in isolation. A disruption in one region can affect energy prices, trade flows, inflation expectations and investor sentiment globally,” he says.
He emphasised that India must build markets that are deep, efficient and resilient enough to absorb such external shocks, calling for a balanced regulatory approach that supports growth without compromising stability.
“At SEBI, our approach is optimum regulation, proportionate and risk-based regulation that enables growth with guardrails,” Mr Pandey says. “A forward-looking regulation is not necessarily light-touch regulation. It is smart regulation.”
He says SEBI continues to evaluate whether existing frameworks facilitate efficient capital raising and whether disclosure requirements remain fit for purpose. At the same time, he stressed that ease of doing business must be accompanied by accountability.
Highlighting the need to strengthen India’s financial ecosystem, Mr Pandey pointed to the importance of developing the corporate bond market, with a focus on improving liquidity, expanding issuer diversity and widening investor participation. A deeper debt market, he says, would complement equities and support long-term financing for infrastructure and enterprise.
On market integrity, the SEBI chief described it as 'non-negotiable', stressing that trust is the cornerstone of any financial system. He says fair conduct, transparent disclosures and strong surveillance mechanisms are essential to sustaining investor confidence.
“Growth and liquidity create lasting confidence only when supported by integrity,” he says, adding that intermediaries such as merchant bankers, brokers, investment advisers, research analysts, portfolio managers and distributors must act as 'gatekeepers of trust'.
Talking about AI, Mr Pandey says while such tools can enhance efficiency and risk detection, they also pose new vulnerabilities. "
“Algorithms may move faster than human controls, and digital platforms can become channels for fraud,” he warned. “While next-generation AI tools tools can help identify weaknesses faster, they can also exploit vulnerabilities at speed and scale. In an interconnected securities market, a single weak link can create wider risks. Regulated entities have to stay ahead of such risks through stronger cyber resilience, continuous monitoring, and faster remediation."
He says SEBI is in constant touch with market participants and relevant stakeholders as the latest challenge after Mythos-and similar AI models test the resilience and plans to issue an advisory addressing risks arising from AI-driven systems and cyber vulnerabilities.
On investor participation, Mr Pandey noted the sharp rise in retail investors entering markets through digital platforms and mutual funds, describing it as a positive trend but cautioning that participation must be responsible.
“Access must be matched with awareness, and convenience with caution,” he says, stressing the need for continuous investor education and transparent communication of risks and costs.
He also highlighted 'Project Jagrook', a proposed nationwide initiative aimed at improving investor awareness through coordinated efforts involving regulators, market institutions and industry bodies.
Mr Pandey concluded by emphasising that building strong financial markets requires collaboration among regulators, industry participants and investors. “Our goal is to build markets that do not merely reflect India’s growth, but power it,” he says.
