The Securities and Exchange Board of India (SEBI) is set to convene a board meeting today, where key topics such as F&O norms, insider trading regulations, and FPI disclosure rules are likely to be discussed. This is the first SEBI board meeting since allegations were made against Chairperson Madhabi Puri Buch by Hindenburg Research.
Key Points Expected in the SEBI Board Meeting
- Relaxation on Research Analyst and Investment Advisory Norms
The SEBI board may consider easing norms for research analysts and investment advisors, including changes in certification requirements and the removal of minimum net worth criteria. Proposed changes suggest that applicants may only need a graduate degree, pass the National Institute of Securities Markets (NISM) exam once, and focus on recent developments for certification renewals. - Revision of Insider Trading Norms
SEBI is expected to redefine the term “connected person,” potentially replacing “immediate relative” with “relative” to align with the Income Tax Act. The updated rules may also expand categories of connected persons to include firms, advisors, and individuals with significant financial ties to connected persons, such as shared households. - Revised F&O Norms
There may be a discussion to revise Futures and Options (F&O) norms, particularly aimed at reducing participation from small and marginal traders to ensure stability and reduce risks associated with speculative trading. - Relaxation on FPI Disclosure Norms
The board may consider easing the disclosure requirements for Foreign Portfolio Investors (FPIs) to streamline and make the process more transparent. - Changes in Mutual Fund Regulations for Passive Funds
Modifications in mutual fund regulations could be on the agenda, particularly for passive funds, to introduce more flexibility and enhance transparency for investors. - Performance Validation Agency for Portfolio Managers and Investment Advisors
SEBI had previously proposed the creation of a Performance Validation Agency to validate the performance claims of registered intermediaries, including investment advisors, research analysts, and portfolio managers. This proposal may be revisited for further discussion and approval. - Introduction of a New Asset Class
A new asset class could be introduced that sits between a portfolio management service and a mutual fund, aimed at offering investors more options for investment vehicles.
Additional Points of Discussion
- Fast-Track Rights Issue: SEBI may propose fast-tracking rights issues, removing the requirement for companies to file a draft letter of offer with SEBI. Essential information like pricing and record dates would be disclosed instead, simplifying the process.
- Merchant Bankers’ Regulations: A new classification system for merchant bankers may also be on the agenda, dividing them into two categories based on their net worth, with Category 1 firms requiring at least ₹50 crore and Category 2 firms needing a minimum of ₹10 crore.
Context of the Meeting
The meeting comes after allegations against SEBI Chairperson Madhabi Puri Buch, accusing her of having ties to offshore funds linked to the Adani Group. SEBI had previously investigated the allegations and gave a clean chit to the Adani Group. Additionally, Buch and her husband denied the allegations and confirmed that they had complied with all required disclosures.
The SEBI board consists of four full-time members and three part-time members, and today’s meeting is expected to provide clarity on several regulatory changes that could significantly impact market participants.
