Markets regulator SEBI on Wednesday approved a list of proposals in its June Board Meeting, including reducing the listing timeline, enhancing disclosure requirements for certain FPIs, and introducing board nomination rights for InvITs and REITs. SEBI mandates additional disclosures for FPIs with concentrated holdings or excessive exposure to Indian equity market. The amendment to SEBI (Foreign Portfolio Investors) Regulations, 2019 aims to enhance transparency and risk management.
The board also cleared reducing the time period for the listing of shares in public issues from the existing 6 days to 3 days from the date of issue closure (T Day). The market regulator, however, deferred the proposal to regulate the total expense ratio charged by mutual fund houses.
Addressing the Media after the meeting, SEBI Chairperson Madhabi Puri Buch said that SEBI has decided to mandate additional granular-level disclosures regarding ownership, economic interest, and control from certain FPIs. Those FPIs which will have to make additional disclosures including those holding more than 50 per cent of their Indian equity AUM in a single Indian corporate group; or FPIs that individually, or along with their investor group, hold more than Rs 25,000 crore of equity AUM in the Indian markets.
She also said that certain FPIs, despite falling under the categories of investors who are required to make additional disclosures, are exempted from doing so. Those exempted include government and government-related investors, pension funds and public retail funds, certain listed ETFs, corporate entities, and verified pooled investment vehicles meeting certain conditions.
SEBI Chief also disclosed that the market regulator is discussing about the impact of finfluencers and a consultation paper on the same might come out in the next 2 months.
"We have been discussing finfluencers that their count is increasing...Our thinking on finfluencers is crystallising. We will bring out a consultation paper in one or two months," the SEBI chief said, in response to a question. Adding that teaching about stock markets is something we appreciate, but if there is inducement to trade that you will become 'crorepati' in two years such an inducement is inappropriate".
Here Are The Key Decisions Taking In SEBI Board Meeting
- SEBI enhanced disclosures for certain classes of foreign portfolio investors (FPIs) with concentrated holdings in a single corporate group. FPIs meeting specific criteria, including significant equity holdings or over 50 per cent of equity Asset Under Management (AUM) in a single group, must provide detailed information on ownership, economic interest, and control rights. Government-owned funds and retail funds are exempt from the new requirements. The move aims to increase transparency and strengthen risk management in the Indian markets.
- The SEBI board approved the proposal for reducing the time period for listing shares in Public Issues from existing six days to three days, from the date of issue closure (T Day). The revised timeline of T+3 days shall be made applicable in two phases i.e. voluntary for all public issues opening on or after September 01, 2023 and mandatory on or after December 01, 2023.
- The SEBI also approved a proposal to enable direct participation in repo transactions in corporate bonds through the Limited Purpose Clearing Corporation (LPCC). This move allows entities to participate directly in repo transactions without involving a clearing member, facilitating greater accessibility and efficiency in the corporate bond market.
- The market regulator will introduce board nomination rights for unitholders of Infrastructure Investment Trusts (InvITs), Real Estate Investment Trusts (REITs). The board has approved the sponsor of InvIT/ REIT "be required to hold a certain minimum unitholding on a reducing scale for the entire life of the InvIT/ REIT". The mandatory minimum unitholding shall be locked-in and be unencumbered.
- The SEBI has also decided to strengthen the investor-grievance mechanism by integrating SCORES with online dispute resolution. The regulator approves provisions for listing non-convertible debt securities and voluntary delisting of NCDs. Entities with outstanding unlisted NCDs as of December 31, 2023, have the option to list them but it is not mandatory. Additionally, entities with privately placed, listed debt securities with less than 200 debt security holders are eligible for delisting under this framework.
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