The Securities and Exchange Board of India (SEBI) approved a number of proposals on Saturday during a press meet. Among these are the development of a legal framework for index providers and the giving of freedom to Not for Profit Organisations (NPOs) for fundraising through the social stock exchange.
The key modifications include a reduction in the minimum issue size and application size for public issuance of Zero Coupon Zero Principal Instruments (ZCZP) by NPOs on SSE. This move, lowering the minimum issue size from Rs. 1 Crore to Rs. 50 lakh and the minimum application size from Rs. 2 lakh to Rs. 10,000, is expected to encourage wider participation, including retail investors. Additionally, NPOs are now permitted to disclose their past social impact reports in fundraising documents, subject to the disclosure of key parameters such as the number of beneficiaries, cost per beneficiary, and administrative overhead.
In discussing the imperfections of the IPO price discovery mechanism, Madhabi Puri Buch, the chairperson of the market regulator suggested a prudent strategy for retail investors—waiting for price stabilization post-IPO, reviewing quarterly results, and then considering entry into the secondary market.
Discussing the inclusion of stocks in the derivatives market, SEBI expressed the complexity of data analysis, highlighting ongoing challenges and the need for more time. Regarding the proposal to extend F&O trading, the chairman emphasized the importance of feedback from exchanges, brokers, and investors before a decision can be made.
SEBI has also introduced a regulatory framework for Index Providers with the goal of enhancing transparency and accountability in the governance and administration of financial benchmarks in the securities market. The regulations will facilitate the registration of Index Providers licensing ‘Significant Indices’ notified by SEBI based on objective criteria.
Moreover, SEBI has approved amendments to the SEBI (Real Estate Investment Trusts) Regulations, 2014, to create a regulatory framework for Small & Medium REITs (SM REITs). The amendments allow SM REITs, with an asset value of at least Rs. 50 crore, to create separate schemes for owning real estate assets through special purpose vehicles constituted as companies.
