SEBI Investor Survey 2015 – Protect Share Market Investors’ Interest

SEBI Investor Survey 2015 – Protect Share Market Investors’ Interest

To develop and regulate the fast growing securities markets in India, especially following the economic reforms of 1991, the Securities and Exchange Board of India Act, 1992, established the Securities and Exchange Board of India (SEBI) on April 12 of that year.

Through comprehensive monitoring, supervision, and policy development, SEBI continued to showcase its keenness to promote and develop the Indian securities markets and protect investors’ interest.

The primary mandate of SEBI according to its preamble is, “...to protect the interests of investors in securities and to promote the development of, and to regulate the securities market”.

Since risk-adjusted returns from equities tend to outperform other asset classes in the long run, participation in securities markets is imperative not only for the development of the economy as a whole but also to socialize the gains from corporate profits.

Jeremy Siegel’s seminal text on the subject of long- term, risk-adjusted returns of equities markets uses data from the United States (US) to prove that stocks have the highest risk-adjusted returns due to the mean reverting properties of equities returns.

In a cross-sectional study of emerging markets, Spierdijk and Umar (2014) also find that domestic investors benefit from stock markets in the long run8.

Thus, an equally important mandate of SEBI is to ensure efficient functioning & promoting these markets by providing various investible instruments to the existing as well as potential investors.

SEBI Investor Survey (SIS) 2015, conducted by Nielsen India Pvt. Ltd., is the fourth iteration of a periodic SEBI- sponsored investor survey, which primarily focuses on research questions most critical to policy makers. The survey was developed to identify and understand investor perceptions regarding investment choices and savings instruments and to probe further into the decision-making processes of non-investors, particularly by attempting to understand their non-participation in market instruments and their approaches to saving.

In addition to a broader coverage in the survey’s geographic scope and a substantially larger sample size than the previous survey, SIS 2015 also provides a robust estimation of investors in the country. Although the sample is right- skewed in income to capture more investors, no areas (urban or rural) were dropped following the listings exercise in order to avoid a bias in the estimates of key variables like total investor households or securities markets participation rate.

 Since the data requires a significant number of investors to create rigorous analyses and estimates, it was recognized that random sampling would not be effective for this investor-focused survey.

However, it was also apparent that ignoring certain States or socio- economic groups would lead to a statistical bias, and the sample would not then be a true visual of the broader population. The methodology is unique and is one of the key strengths of this survey.

While details of the sampling techniques are provided , the breadth of the survey (with over 50,000 responses across all States and Union Territories except Lakshadweep), its additional focus on rural respondents (1/3rd of the sample) and the depth of the questionnaire (from perceptions on risk, returns, and liquidity to actual investment behaviour; from risk mitigating strategies to demographic details) makes this survey distinctive – even in the global arena.

Another key element of the report is a detailed survey of market participants, including Depository Participants (DP), Mutual Fund Agents (MFA), Brokers, Authorized Persons (AP) and Sub-Brokers (SB). With falling commissions and tightening margins, higher Internet penetration and online trading, lower volumes in some businesses and larger institutional players entering the market, market participants’ businesses have undergone a sea change in the last five years. SIS 2015 is arguably the sole attempt to rationalize the perceptions and sentiments of the many participants in this fast- evolving market.

SIS 2015, while focusing on securities markets, is primarily a survey of retail consumers of investment instruments. Thus, the securities markets expertise of SEBI and the consumer focus of Nielsen have formed a unique and valuable partnership to help create not only a deeper understanding of the choices and the psyche of the Indian investor but also of the potential investors who can but choose not to participate in the markets.

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