SEBI Chairman Assures No Systemic Risk Amid Global Trade War Volatility

Amid rising global market volatility triggered by US President Donald Trump’s renewed trade war measures, Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey has reassured investors that India’s capital markets remain fundamentally sound and are not at risk of systemic failure.

Speaking to Bloomberg in Mumbai, Pandey, who assumed office just last month, stated, “I think investors have no need to panic.” Despite the heightened anxiety in the markets due to the imposition of aggressive US import tariffs, he emphasized that there is no abnormal pressure being observed on margins or settlements.

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Unique Settlement Infrastructure Provides Stability

Pandey attributed India’s strong market resilience to its robust and unique trade settlement infrastructure. Both of the country’s major stock exchanges—National Stock Exchange and Bombay Stock Exchange have interoperable clearing corporations. This kind of interoperable structure allows one exchange to settle trades in the market on behalf of the other, effectively minimizing the risk of a broader system-wide disruption if one clearing house encounters any kind of operational issues in the future.

“This is a very unique system,” Pandey explained. “It ensures that even if one entity fails, the market as a whole continues to function smoothly.”

Dematerialization : A Protective Shield for Investors

In addition to the clearing infrastructure, Pandey highlighted the role of dematerialisation in securing investor funds. With securities held electronically and transactions linked directly to investors’ bank accounts, the scope for financial loss due to broker defaults is minimal.
“Money from any transaction is directly debited or credited to their bank accounts,” said Pandey. “This acts as a firewall that protects investors, especially retail participants, from intermediary-level defaults.”

India VIX Spikes, But Market Holds Ground

While the India Volatility Index or the VIX, often dubbed the “fear index,” surged to a record high on Monday, Indian equities have shown remarkable resilience. Since the announcement of new US tariffs on April 2, India’s Nifty 50 Index has only declined by about 2%, compared to sharper drops in global indices like the MSCI Asia Pacific Index (down 9%) and the S&P 500 (down 8%).
Pandey noted this as a sign of evolving investor behavior. “People are learning to stay calm,” he said, highlighting a maturing domestic investor base that is increasingly immune to short-term panic.

Conclusion

Despite mounting global uncertainty, SEBI remains confident in the strength and stability of the Indian financial system. With institutional safeguards like interoperable clearing houses and a fully dematerialized system, the Indian stock market is well-prepared to withstand external shocks. SEBI’s clear communication signals not just regulatory confidence in the system, but also a growing maturity in investor sentiment which is an essential ingredients for long-term market resilience.