Obama just became the top man in the US's topmost office. The electronic and print media dedicated long time spots and pages talking highly about the 'change' affected by the US nationals. But as Obama says this cannot be construed as the 'change' but 'start of change'. Not only the US but the world is positive towards this action. Indians are also watching the development with keen interest.

The most unfortunate are those who still think that things will be turned around in a span of few days or a couple of months. Especially, the investor community, which fails to understand that the things don't turn bad overnight but they are made as they are over a long period of time. So, a transformation happens over decades. Financial systems don't change just like that. There is a need to understand the needs of the financial systems worldwide in the long term.

There are many that talk empowerment of regulators and absolute transparency in the system. However, the key issue is something else. There are many who ignore the basic premises on which the system stands. There is a need to shift from 'rule-based system' to 'principles-based system'. Instead of becoming utterly compliant and providing information for the sake of it, there is a need to educate the regulators to use it to better the systems.

The most important factor thus becomes the very understanding of the regulators of the broad markets and at the micro level knowledge of all the products along with the strategies that are used in the market place to play any position. It is important to know the positions each player has got in the market but more than that it is necessary to understand what impact it may have on the broad markets.

In the Indian context, the regulators unfortunately are ill equipped to handle the issues in the system. The cautious stands they have taken over the years have saved them from aligning completely with the rest of the world, especially the developed financial markets. However, it may not be the case in future and there is a need to imbibe the values of 'principles-based systems' in the Indian financial market. The political pressure is much more in India than any other part of the world. This factor can make or break the future of India, because it is imperative that a sound financial system will decide if we grow at 9% of the traditional Hindu growth rate of 3.5%.