Examine the case for reducing regulatory discretion in quasi-judicial enforcement by market regulators.

Regulatory discretion is the latitude a statutory regulator enjoys in deciding whom to proceed against and on what terms. SEBI's September 2026 settlement overhaul — a formula-driven settlement amount, a fast-track route below ₹10 lakh and a 90-day filing window [5] — makes this a live governance question.

The case for curbing discretion

• Predictability and rule of law: a formula lets an applicant compute her exposure in advance. SEBI itself moved this way by publishing a Settlement Calculator (BETA) in May 2024 [2] — arithmetic replaces bargaining.
• Equality of treatment: comparable violations should attract comparable outcomes; open-ended discretion risks a large-entity bias and invites allegations of regulatory capture.
• Speed and institutional bandwidth: the alternative is show-cause notice, order, appeal to the Securities Appellate Tribunal, then the Supreme Court — years during which the lapse stands uncorrected.
• Judicial durability: anchoring settlement in the Securities Contracts (Regulation) Act rather than in SEBI's rule-making alone makes outcomes harder to unsettle [5].

Why discretion cannot be eliminated

• Enforcement requires classification, not computation: keeping cases involving market integrity or large investor losses outside settlement [5] is a judgement call that no formula can make.
• Settlement involves no admission of guilt and creates no precedent; Adani group companies settled disclosure proceedings in September 2026 [3], leaving the underlying legal question unresolved.
• A ₹10 lakh threshold sorts cases by price, not gravity — a repeat offender in a small-value matter may bypass the High Powered Committee, whose rejection power SEBI has retained [5]. Discretion is thus relocated, not removed.

Way forward: structured discretion, as envisaged by SEBI's High Level Committee on Enforcement and Settlement (2018) [1] — publish the new formula upfront, disclose reasoned rejections alongside settlement orders, and retain consultation-led rule-making, as in the 2026 PMS review [4].

Reducing discretion strengthens fairness and finality; eliminating it would blunt enforcement. The goal is discretion that is bounded, reasoned and reviewable — the essence of Article 14's guarantee against arbitrariness in regulatory action.