Since the mid-1990s, investors and regulators have benefited from a high degree of competition in the Indian securities industry. Even more than all the policy changes that have taken place, it is technology and competition that have transformed the Indian capital market in the last 7-8 years. This paper shows that there is now considerable evidence that critical elements of the Indian securities industry are becoming significantly less competitive than in the past. Reduced competition would remove the single most important driver of capital market modernisation in this country and would create several serious regulatory problems. The paper argues that rather than applying the traditional solution of "regulated monopolies", regulators need to adopt strong measures to stimulate competition. The regulator must also ruthlessly discard those elements of the regulatory regime that are anti-competitive in nature.