Mumbai: India’s capital market regulator may see a change at the top because the terms of five key officials come to an end by August.

While the finance ministry has already begun hunting for two whole-time members at Securities and Exchange Board of India (Sebi) to replace M.S. Sahoo and K.M. Abraham, terms of three executive directors, too, are coming to an end in July and August.

New framework: Sebi chairman U.K. Sinha. Ashesh Shah/Mint

Sahoo and Abraham, who joined in July 2008 under former Sebi chairman C.B. Bhave, played a key role in shaping policies. They were instrumental in not only introducing advanced systems and processes for the development of domestic capital markets, but also played a pivotal role in resolving complex investigation processes and improving surveillance mechanism significantly.

Appointment of whole-time members of Sebi are done by the department of economic affairs under the ministry of finance.

The appointment process typically starts at least three months ahead of the retirement of incumbent members. In February, the ministry put out a notice inviting applications for the two positions.

The three executive directors whose contracts are expiring in next few months are K. N. Vaidyanathan, J.N. Gupta and J. Ranganayakulu.

While Vaidyanathan and Gupta were appointed in July 2009 for two years, Ranganayakulu was given charge of legal affairs and enforcement department in August 2008. His term will come to an end in August.

Under Vaidyanathan, the regulator took a series of steps to change the profile of Indian mutual fund industry that was forced to scrap entry fees and levy a uniform exit fee across all classes of investors and schemes. Entry fee is an upfront commission paid to a distributor by an investor for investing in a mutual fund scheme.

To prevent the industry from facing any abrupt liquidity crunch on their liquid and money market schemes, Sebi also mandated fund houses to value all long-dated securities on a mark-to-market (MTM) basis. MTM is an accounting practice of valuing a financial asset on its market value, rather than at the price at which it was bought.

Though fund houses are critical of these moves, Sebi has justified its actions saying they will benefit investors and stabilize the industry.

Gupta oversees the departments of derivatives, new products, market regulation and integrated surveillance, and Ranganayakulu takes care of legal affairs and enforcement department.

Under these two officials, Sebi has been able to introduce new exchange-traded products and enhance transparency across all capital market activities. The regulator has also taken on powerful corporate groups and resolved a number of complex high-profile legal cases .

Sebi has three whole-time members and seven executive directors.

All five officials whose terms are coming to an end in the new fiscal year are eligible for extensions. The finance ministry can extend tenures of Sahoo and Abraham, while the Sebi board appoints executive directors.

On Sinha’s agenda are a new framework for mergers and acquisitions for Indian companies (following the recommendations of the takeover regulations advisory committee headed by C. Achuthan, former chief of the Securities Appellate Tribunal), and new guidelines for market infrastructure institutions, such as stock exchanges, and depositories and clearing corporations (following recommendations by a panel headed by former Reserve Bank of India governor Bimal Jalan), among others.