India's financial watchdog for the securities and commodities markets, the Securities and Exchange Board of India (SEBI), has overhauled its internal conduct rules following high-profile allegations of conflict of interest. This move follows intense public debate triggered by claims from Hindenburg Research against the regulator's former leadership chaired by Madhabi Puri Buch. While the former chief Buch was cleared of these accusations by the national anti-corruption body, the board decided a more robust framework was necessary to maintain public trust. The new rules, which replace a code dating back to 2008, aim to ensure that those supervising the markets are held to the highest standards of transparency.

Cooling-off periods and job disclosures

New regulations now mandate a strict two-year "cooling-off" period for senior officials leaving the organisation. During this time, they are prohibited from representing clients in investigations, settlement proceedings or fundraising matters before the board. To prevent conflicts of interest, current staff must disclose any job negotiations or future employment offers within one month of the discussions taking place. Even the tradition of gift-giving has been reined in; the value of mementoes or souvenirs received by an official is now capped at ₹50,000.

Stricter curbs on personal wealth

The updated code significantly expands its scope to include the families of employees. Spouses and dependent children are now subject to investment restrictions that previously applied only to staff. Employees must either sell or freeze their personal stock holdings before beginning their tenure at the regulator. Fresh investments in individual stocks or risky derivatives are largely banned for staff and their households.

Some leeway exists for professionally managed funds or employee stock options from a spouse's job, but even these are monitored. To prevent overexposure to any single firm, no more than a quarter of an official's total investments can be tied to a single regulated fund manager. Furthermore, officials are now required to formally step away from any case involving close friends, relatives or former business associates to ensure complete impartiality in their decision-making. This system of "recusal" will be tracked through a new digital recording framework.