Lifting the Lid on Regulatory Silence

When the head of the BSE recently told a television interviewer that “conversations between regulator and regulated are confidential,” it was not a deflection. Nor was it evasive when the Reserve Bank of India governor responded to a question about events at a bank with a similar refrain. On this front, at least, both regulator and regulated are aligned.

The default position on violations or regulatory trespasses is silence. Even when enforcement orders are published, they rarely paint a picture of how problems emerged or what patterns of failure are taking shape. The argument is familiar: confidentiality preserves stability, and the public should trust that the watchdogs are watching.

What is missing is the upstream learning loop that comes from knowing the regulator’s view of common breakdowns and emerging risks while there is still time for others in the market to correct course. This gap leaves boards, risk teams, investors and even other regulated entities in the dark about where trouble might be brewing.

It may be time to reconsider this approach. The aim is not to name and shame individual firms, but to lift some of the secrecy around violations so that the system as a whole is better informed. Regulators could publish the “what” and “how” of misconduct without identifying the actors involved. Such disclosure could be regular and structured, allowing participants to see the patterns without triggering unnecessary panic.

This approach is far from regulatory heresy, since confidentiality will still have a place, particularly when premature disclosure could set off a market run. Keeping privileged dialogues private makes sense, but that need not mean every detail is withheld. Markets leak anyway, and selective access to information creates asymmetry. Far better to provide all participants with enough detail to raise the collective competence of boards and investors, strengthen risk oversight, and reinforce that fragile currency called trust.

The logic for silence is that transparency taken too far might spook markets. The result is that the details of enforcement actions, the nature of violations, and the remedial measures taken disappear into the machinery of supervision. Public references are often reduced to bland warnings about systemic risk or sector stress, which help no one identify specific weaknesses.

Opacity, though, brings its own hazards, as the absence of specifics leaves the market to guess which risks are real and which are rhetorical. Without knowing which rules are breached most often or what kinds of red lines exist in practice, participants are left unsure whether the regulator is truly confronting risks or merely cleaning up quietly in the background.

There is a better way. 

Publishing practical, plainspoken details of violations, stripped of names, can make the marketplace more intelligent. The goal is to help the system recognise whether breaches are basic compliance lapses or signs of deeper systemic problems. Over time, this can help boards prioritise oversight, prompt investors to ask sharper questions, and encourage regulated entities to fix problems before they escalate.

Markets already factor uncertainty into valuations, but they do it better with information. A calm, predictable disclosure regime that reports on the shape, scale and seriousness of violations could reduce rumour-driven price swings. It could also force boards to focus on what matters, encourage whistleblowers to speak up, and position the regulator as a real-time steward rather than a remote referee.

Trust in finance is too fragile to rest solely on the promise that matters are in hand. If the objective is a market that is both stable and smart, the reflex for secrecy needs to be rethought. Regulators need not parade the guilty, but they can and should share structured information on breaches. This would not only enhance accountability but also build a system where confidence comes from clarity, not just assurances.

By lifting the lid carefully and consistently, regulators can create a financial environment in which both stability and transparency are standard practice. In a world where confidence is easily shaken, a little more daylight could make the whole system stronger.