Finance ministry official Ajay Tyagi takes over as Securities and Exchange Board of India (SEBI) Chairman on Wednesday with two likely priorities - developing the country's commodity and corporate bond markets and shoring up corporate governance.
Tyagi, 58, will also inherit from outgoing SEBI Chairman U.K. Sinha critical regulatory decisions, including whether to penalise India's largest exchange, National Stock Exchange, over potential trading violations and whether to adopt tougher rules against high-frequency traders.
Tyagi has already been closely involved with the capital markets regulator, having served as additional secretary at the finance ministry's economic affairs department since 2014, the same unit that oversees SEBI.
He inherits an organisation that has become bigger much more muscular under Sinha, who served for six years, the second-longest term by any SEBI Chairman.
To accomplish his objectives, Tyagi will now need to balance multiple constituencies such as traders, fund managers and the Reserve Bank of India.
But those who work with him believe he brings the right skill and personality to the job. Importantly, he is widely respected within the finance ministry, whose support he will need as SEBI Chairman.
"Tyagi is a very straight-forward and a balanced person who believes in finding solutions for a problem. You can't get anything out of him through flattery," said a senior finance ministry official who has been working with him.
Continuing to develop and shore up confidence in commodity derivatives will likely be among his top priorities after exchange National Spot Exchange Ltd (NSEL) was charged with fraud after taking in trades without providing adequate settlements or collateral.
Tyagi was instrumental in merging then standalone regulator Forward Markets Commission with SEBI last year, and will oversee the new entity as India seeks to attract more institutional investors.
"That was his pet project," said the head of futures trading at a major foreign lender. "We are expecting that he will focus on the commodity market and bring in a number of regulatory changes in that area."
Tyagi will also be expected to spearhead reforms of India's nascent corporate bond market. The new SEBI Chairman was part of a panel that announced a series of major initiatives last year, including pushing trading into electronics platforms rather than over-the-counter.
Spearheading those reforms is critical for India given the need to provide financing for companies at a time when banks are unable to lend as they deal with $133 billion in stressed assets.
Shoring up corporate governance is also likely to be a priority after recent high-profile corporate tussles, including between the Tata conglomerate and its former chairman, have highlighted the need for better oversight and tighter regulation of company boards.
Other critical issues remain pending for Tyagi to address.
SEBI is yet to announce any action against the NSE, which has filed for India's biggest IPO in six years, and disclosed it had potentially provided unfair access to its servers to some high-frequency traders.
SEBI is also yet to announce regulations on algorithmic trading (HFT), after the regulator announced draft guidelines that were seen as overly tough by some market participants.
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