Conflict management: Thy name is governance

In the realm of market regulation, managing conflict is the key to effective governance

- M S SAHOO & SUMIT AGRAWAL

Once, a Securities and Exchange Board of India (Sebi) chairperson was mocked for never having "seen a share certificate", casting doubts on his ability to regulate the securities markets. Today, the tables have turned, as another chairperson has drawn attention for having "seen share certificates". What was once considered a qualification is now perceived as a potential liability, bringing conflicts of interest to the forefront of governance. In between, a different chairperson with modest holdings chose to divest them before assuming office, reinforcing the need for regulators to, like Caesar's wife, remain beyond reproach, free from even the appearance of conflict.

In a market economy, conflict of interest is inherent and often unavoidable in any professional or organisational setting, as individuals and entities juggle multiple roles and responsibilities often with competing interests. However, the problem arises when an individual in a regulatory position allows personal interests to influence his/her official decisions. While excluding individuals with potential conflicts from regulatory roles might seem a straightforward solution, it risks narrowing the pool of qualified candidates. The key is not having conflicts, but ensuring they don't cloud judgement.