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Sebi Board Meeting Outcome Today: Markets regulator doubles FPI disclosure threshold to Rs 50,000 crore, sets up panel on conflict of interest, and allows IAs & RAs to charge 1-year advance fees
Newly appointed Sebi Chairman Tuhin Kanta Pandey addressed reporters in Mumbai after the Sebi board meeting on Monday.
Sebi Board Meeting Outcome Today: The Securities and Exchange Board of India (Sebi) on Monday decided to double the investment threshold for granular disclosures by foreign portfolio investors (FPIs) to Rs 50,000 crore, set up a high-level committee to review conflict of interest by its members, and allowed investment advisers & research analysts to charge advance fees for up to 1 year.
The decisions were taken markets regulator Sebi’s board meeting conducted on Monday. Following the meeting, newly appointed Sebi Chairperson Tuhin Kanta Pandey addressed press conference in Mumbai, briefing reporters about the decisions.
Here are the Sebi board decisions taken on Monday:
High-level Committee Set Up To Review Conflict Of Interest For Board Members
Markets regulator Sebi on Monday decided to set up a high-level committee to undertake a comprehensive review of conflict of interest, disclosures pertaining to property, investments and liabilities of members and officials on the board.
The high-level committee, which is expected to submit its recommendation within three months from the date of the constitution, will be placed before the board of consideration. The committee will comprise eminent persons and experts with relevant backgrounds and experience in constitutional or statutory or regulatory bodies, government/ public sector, private sector and academia.
The names of the committee members will be announced in due course, newly appointed Sebi Chairperson Tuhin Kanta Pandey told reporters after the board meeting in Mumbai.
FPI Investment Threshold for Granular Disclosures Doubled to Rs 50,000 Crore
Markets regulator Sebi’s board on Monday approved a proposal to double the investment threshold for granular disclosures by foreign portfolio investors (FPIs) to Rs 50,000 crore.
This is aimed at addressing the changing market dynamics without altering the concentration criteria, which remain unchanged.
At present, certain FPIs with equity assets under management (AUM) exceeding Rs 25,000 crore are required to provide granular details of all their investors or stakeholders on a look-through basis.
“Cash equity markets’ trading volumes have more than doubled between FY 2022-23 and the current FY 2024-25. In light of this, the board approved a proposal to increase the applicable threshold from the present Rs 25,000 crore to Rs 50,000 crore,” Pandey said.
“Thus, FPIs holding more than Rs 50,000 crore in equity AUM in the Indian markets will now be required to make additional disclosures,” he added.
Investment Advisers, Research Analysts Allowed To Charge Advance Fees for Up To A Year
Capital markets regulator Sebi board on Monday decided to allow investment advisers and research analysts to charge advance fees for up to one year.
Under the existing rules, investment advisers (IAs) can charge fees in advance for up to two quarters if agreed upon by the client, while for research analysts (RAs) it was only for a quarter.
Sebi said that IAs and RAs regulations were earlier rationalised to address many concerns of the industry. Most of the changes have been welcomed by them. However, concerns remained on some of the fee-related provisions which restricted collection of advanced fees by IAs/ RAs to six months or three months fee.
“In order to address those concerns, the board has decided that if agreed by the client, IAs and RAs may charge fees in advance up to a period of one year. Earlier, IAs and RAs were allowed to charge advance fees for a maximum period of two quarters and one quarter respectively,” said the Sebi chairman.
He further clarified that the compliance requirements related to fee limits, payment modes, refunds, and breakage fees will only be applicable to individual and Hindu Undivided Family (HUF) clients.
In case of non-individual clients, accredited investors, and in case of institutional investors seeking recommendation of proxy adviser, fee related terms and conditions will be governed through bilaterally negotiated contractual terms.
Relaxations for AIF
The Securities and Exchange Board of India on Monday introduced key regulatory changes, including allowing Category II alternative investment funds (AIFs) to allocate a larger share of their assets to listed debt securities rated ‘A’ or below. Additionally, Sebi reversed its previous rule limiting advance fee collection by registered investment advisors, now permitting them to collect up to one year’s fee instead of three months.
(With PTI Inputs)