self - regulation in financial markets – looking back and looking ahead 1 ( keynote address delivered by shri m. rajeshwar rao, deputy governor, reserve bank of india – march 05, 2023 - at the 17th fedai annual conference at cairo, egypt ) 1. a very good morning to all of you. it is indeed a pleasure to be here amidst all of you today at the 17th annual conference of fedai. these annual events of fedai provide an excellent opportunity for the exchange of ideas and thoughts among the foreign exchange market participants and i am sure this one will be no exception. 2. today, as i speak to the market veterans assembled here in cairo, it strikes me that it is fitting perhaps that this conference is being held here in the year of india ’ s g20 presidency, the year of the “ vasudhaiva kutumbakam ” or “ one earth · one family · one future ”. india and egypt are arguably two of the world ’ s oldest civilizations. both share a glorious past. 3. india was one of the largest economies in the world for about two millennia starting around the end of the 1st millennium bc. documented economic history suggests that for most of the period since the first century ad, the indian economy was the largest in the world. at the beginning of the british rule in india, it accounted for close to a quarter share of global gdp. since then, there has been an inexorable loss in india ’ s share of global gdp. but we have not just arrested this decline, but indeed have been able to reverse it. india ’ s gdp 2 is today the third - largest in the world in ppp terms and fifth largest in terms of market exchange rates. india is today considered as one of the fastest growing economies of the world with clear emphasis on strong macroeconomic fundamentals and is recognised as one of the few bright spots amidst current challenges and uncertainties. 4. the signs of these changes have been quite apparent for some time now. in just over a decade, the country ’ s nominal gdp has increased four - fold from ₹64 lakh crore for fy 2010 to ₹273 lakh crore for fy 2023 3. its external trade has also increased from ₹29 lakh crore to ₹137 lakh crore during the same period 4. as a percentage of keynote address delivered by shri m. rajeshwar rao, deputy governor, reserve bank of india on march 05, 2023 at

industries / sectors over the course of the years. over past few decades, the financial sector, both at the global as well as domestic level has witnessed recurrent instances of unethical behaviour. the ability of financial sector intermediaries to uphold themselves to high moral standards came under the cloud in the wake of revelations about the irregular practices around libor fixing. the reliance on self - regulation of hedge funds and the derivatives markets was criticized as contributing to the global financial crisis. in fact, many of these events led to a rethink in the approach towards regulatory framework with greater reliance on regulations returning to public authorities. 15. for any sro to remain relevant in this milieu, it is critical that it demonstrates unrelenting efforts towards ensuring fair practices by its members and is seen as contributing to the objectives of market integrity and customer protection. sros must speech by sec staff ( lori richards ) : self - regulation in the new era, delivered at nrs fall 2000 compliance conference at scottsdale, arizona on september 11, 2000. display their willingness and ability to address concerns beyond the interest of their membership, viz., to protect customers, participants, and other stakeholders in the ecosystem. they must remain neutral and be seen to maintain objectivity. putting in place robust governance norms and internal controls, remaining abreast with market innovations, proactively identifying, and acting on breaches and misconduct, and continuously striving to keep in sight the big picture of balancing market innovation with market integrity are some of measures through which sros can ensure their continuing credibility and relevance. history has shown us that an sro is credible and its role significant only when it is backed by a long track record of responsible behavior under the oversight of public authorities. 16. with this background, let me share some thoughts on the experience in self - regulation in indian financial markets, the evolution of fedai and the role played by it in the foreign exchange market in india. self - regulation in indian financial markets 17. in india, the history of self - regulation has developed over the years, though formal regulatory frameworks for sros is of a relatively recent origin. in the foreign exchange market, fedai was formed in 1958 to lay down the terms and conditions for operations of authorized dealers in india. similar to the developments in other jurisdictions, stock exchanges in india also have historically performed functions akin to sros. in 2004, sebi issued regulations on sros providing guidelines on eligibility, recognition, functions