The broad objective has been to keep pace with the requirements of fast-growing Indian economy, while being vigilant of potential risks to financial stability. This is done through freeing up market forces by moving away from prescriptive to principle-based regulation, whose core features are simplification of processes, encouraging product innovation, removing regulatory differentiation across participant categories and ensuring protection for retail market participants. 18.
Countries such as Argentina, Hong Kong and the People’s Republic of China have opted for this alternative with a reasonable measure of success. There are, however, many reasons why this option is not regarded as appropriate for the present South African situation.