All this could be idle speculation. Newspapers have reported that applications from some persons who consider themselves eligible have already been received. What is, however, worrisome is the fact that the last date for applications was February 17, 2025; with the term of the incumbent expiring on February 28, 2025, there might not be enough time for the selection committee to interact with all the candidates meaningfully, make their recommendations, and thereafter for the government to obtain the approval of the appointments committee of the cabinet. It is this tight time schedule that has given rise to speculations of a short-term extension.

The selection of the appropriate candidate is to be made by the financial sector regulatory appointments search committee chaired by the cabinet secretary. Prior to 2016, this committee was called a search-cum-selection committee, but with an amendment in 2016, it has become a search committee. The reason for this change is not clear. Does the committee no longer get to select from the candidates whose names are placed before it by the finance ministry? Secondly, till 2016, there was a provision for three outside experts, including two experts of eminence from the relevant field to be nominated by the Union government and “such other person, if any, not exceeding 2, as the ministry of finance may nominate”. The expression “experts of eminence” would leave one wondering whether a person has to be eminent (whatever that means), and an expert, in order to be included in the committee. This has been amended by providing for three outside experts of repute to be nominated by the Union government, from a panel of experts. Expertise would have to coexist with repute in order for a person to qualify for inclusion in this committee.

It is a positive feature that the selection committee has been described as a search committee. This would facilitate the committee’s looking at persons who have not applied for the position but are, in the committee’s opinion, suitable for consideration. It opens the door for persons who might not apply to avoid the risk of rejection, especially, persons presently holding public office.

The process to be followed by the search committee has not been laid down. Presumably, the search committee will have interactions with all persons, except those who have not been shortlisted. These interactions would hopefully ascertain the suitability of the person being recommended for appointment as chairperson of Sebi. Hopefully, the candidates who come up before the committee will be asked to explain their road map for Sebi in the event of being appointed, the changes that they would like to make, the areas that they would like to focus on, and what they bring to the table by way of the qualities required to lead Sebi.

Annexure 1 of the communication inviting applications from eligible persons states that the person concerned should be “a person of ability, integrity and standing, who has shown capacity in dealing with problems relating to securities markets, or has special knowledge or experience of law, finance, economics, accountancy, administration or in any other discipline which in the opinion of the Central Government shall be useful to the Board”. Ideally, given the nature of the organisation, it would have been preferable to state that the person concerned should have knowledge of law and finance/ economics, and should have led one or more reasonably large organisations. Domain knowledge or expertise by itself will not qualify a person for the topmost leadership position in Sebi.

High integrity, eminence and reputation have been specifically indicated as the qualities that the search committee will focus on during the process. Sebi is not an attached office or a subordinate office of the government. It is a functionally autonomous organisation, created by statute. It therefore follows that the person selected for the top job should also bring to the table a clear understanding of the concept of functional autonomy, and the courage of conviction to take a stand in the case of the government trespassing into regulatory territory. Absent these two attributes, we could end up with a domain expert, who will not resist pressures brought on the organisation or any individual therein.

The terms state that the person appointed shall have a term not exceeding five years, and shall be eligible for reappointment. This is a problematic provision. The possibility of reappointment often creates or reinforces behavioural attributes of self-preservation in order to persuade the appointing authority that the person concerned should be given another term. Ideally, for all regulatory appointments, there should be a fixed term of five years, and there should be no extension or reappointment. This will contribute to the functional efficiency and autonomy of the organisation.

Until February 28, 2025, speculation will continue. After all, speculation is the lifeblood of the marketplace.

M Damodaran is chairperson, Excellence Enablers, and former chairman, SEBI, UTI, and IDBI.The views expressed are personal