Umair
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This is the first board meeting after new Chairman Tuhin Kanta Pandey has taken charge. It is expected to bring good news for certain sections of the market.
Sebi is also expected to place before its Board the settlement scheme for stock brokers who were associated with unauthorised algo platforms.
The Securities and Exchange Board of India (Sebi) is set to discuss the easing of norms relating to additional disclosures by foreign portfolio investors (FPIs) and on advance collection of fees by research analysts (RAs) and investment advisors (IAs), said sources.
There will also be discussions on norms for investing in listed debt by Category II Alternative Investment Funds (AIFs), and the legal structures for non-profit organisations (NPOs) which list on social stock exchanges (SSEs), sources told Moneycontrol.
This market regulator is to meet its board on March 24, and this will be the first after new Chairman Tuhin Kanta Pandey has taken charge.
It is expected to discuss many ease-of-doing business (EoDB) practices across market segments.
According to sources, the threshold for determining the FPIs which need to make additional disclosures, according to the August 24, 2023, circular, is likely to be increased. As of now, FPIs which have more than Rs 25,000 crore AUM in Indian securities market need to make the disclosures. This may be raised to Rs 50,000 crore.
Another big announcement and one that is likely to provide much relief to registered investment advisors (RIAs) is allowing them to collect more than three months’ fee in advance. They may be allowed to collect a year’s fee. It had been an ask from the RIAs/IAs soon after the January 8 guidelines were released.
Several IAs had announced that the guidelines had made their business unviable and the one that they found particularly difficult to comply with was the three-month limit on advance fee collection. Moneycontrol had reported that the regulator had taken this feedback and would reconsider it, and soon a consultation paper was released to this effect. The whole debate is expected to find a resolution after this board meeting.
Social good
The framework regulating social stock exchanges (SSEs) has seen various significant changes since its launch. Most recently, the minimum application size was reduced even further, to a tenth, from Rs 10,000 to Rs 1,000.
In the board meeting, the definition and list of permitted activities of non-profit organisations (NPOs), which raise money by issuing zero coupon zero principal (ZCZP) bonds on SSEs, may be increased.
These may be in line with a January 20 consultation paper, in which the regulator had proposed including trusts, charitable societies and limited liability companies (registered under Section 25 of Companies Act, 1956) in the legal structures permitted for NPOs.
The paper had also proposed expanding the eligible activities that can be pursued by these NPOs to include more cultural and environmental activities.
Listed debt for Cat II AIFs
Category II AIFs can expect some leeway in the investments it can do in listed securities, to address the shrinkage of unlisted securities following a change in the Listing Obligations and Disclosure Requirement (LODR) Rules.
This category of AIFs are primarily meant to focus on unlisted securities. They are required to invest more than 50 percent of their funds in unlisted securities. But with an amendment in LODR, the unlisted debt securities universe shrank. Therefore, in a consultation paper issued on February 7, 2025, the regulator had proposed allowing these funds to invest a large part of their funds in listed securities but those that carry higher risk with credit rating of ‘A’ or below.
The board will also discuss and approve the Sebi’s budget for financial year 2025-26.
Some other items will be placed before the board as information memorandum but not as agenda items.
One of them relates to the settlement scheme for stock brokers who were associated with unauthorised algo platforms and later received show-cause notices for violating Sebi norms. Moneycontrol had reported that more than 110 brokers, including the big ones, had received the Sebi notice in the matter. Now, these brokers will be able to settle the case by paying Rs 1-2 lakh as settlement amount. The scheme will be notified after the board meeting. The board will also be apprised about the proposed framework for Rs 250 SIP (systematic investment plan), which aims to encourage the penetration of this financial product.
