Speaking to reporters on the sidelines of the Global Fintech Fest here on Wednesday, the Sebi chief likened the planned upgrade in the password systems to Y2K, when computer systems had to be updated from two-digit to four-digit years to avoid failures.
Pandey said the current cryptography, which is used to protect users’ passwords, will need to be updated as quantum computing develops.
“To address post-quantum cryptographic issues, Sebi has prepared an action plan as well as capacity-building initiatives on quantum readiness of its regulated ecosystem,” he said.
Pandey said that with the arrival of quantum computers, traditional cryptography or password-making is possible to be breached.
“In order to mitigate this, crypto-proof passwords, called post-quantum cryptography, or quantum key distribution, will have to be prepared, and gradually they will have to be replaced,” he said.Separately, Sebi whole-time member Ananth Narayan said Sebi is trying to boost the popularity of the SLB (Securities Lending and Borrowing) segment-a platform where investors can lend or borrow shares for a fixed period, typically to facilitate short selling or arbitrage strategies. “Currently, most people tend to use futures markets for shorting trades. We are trying to see if it can be made easier and better for market participants to undertake SLB transactions,” he said.
On whether Sebi should clamp down on short-term derivative contracts, Narayan said the regulator will be “very thoughtful and consultative” in its actions.
“When you have one crore people dealing in derivatives in the fiscal year-each losing on average ₹1 lakh-, obviously, there is something for us to think about,” he said. “Now we are also conscious that a bulk of the ecosystem depends upon derivatives for revenues. The bottom line depends on that. So, we have to be extremely thoughtful.”
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