According to the capital market regulator, asset management firms can now provide high-risk customers with a fixed minimum investment with riskier strategies like long-short equities.
On September 30, 2024, the capital markets regulator Securities and Exchange Board of India (SEBI) conducted its board meeting, wherein, it approved key measures for easing trading practices for regular investors and simplifying norms in the mutual funds (MF) industry. The regulator surprised investors by not announcing any regulation to curb a surge in derivatives trading, which was widely expected by D-Street experts and traders.
Key Measures to Ease Trading and Simplify Regulations
The Securities and Exchange Board of India (SEBI) announced several measures aimed at simplifying regulations and improving investor experience:
1. New Investment Option for High Net-Worth Individuals (HNIs):
- Asset management companies can offer riskier strategies (long-short equity) to HNIs with a minimum investment of ₹10 lakh.
- This bridges the gap between mutual funds and portfolio management services (PMS) for HNIs seeking exposure to equity derivatives.
2. Relaxed Framework for Passive Mutual Funds (MF Lite)
SEBI introduced a simplified “MF Lite” framework for launching passive mutual funds. This encourages new players by reducing compliance requirements and facilitating market entry.
3. Faster Rights Issuance Process
- The timeline for completing rights issues through preferential allotment is reduced from 317 days to 23 days.
- This streamlines the process and provides faster access to capital for companies.
4. Expanded Definition of “Connected Person” for Insider Trading
- SEBI broadened the definition of “connected person” to include spouses, children, parents, and siblings.
- This strengthens regulations against insider trading by encompassing a wider range of individuals.
5. Easier Registration for Investment Advisers (IAs) and Research Analysts (RAs):
SEBI eased eligibility criteria and simplified compliance requirements for IAs and RAs. This promotes wider access to professional investment advice for investors.
Additional Highlights
- Increased number of scrips eligible for optional T+0 settlement (cash market trading).
- Introduction of a single filing system for listed companies across stock exchanges.
- Pro-rata distribution of returns for alternative investment fund (AIF) investments.
- Enhanced disclosure requirements for offshore derivative instruments (ODIs) and segregated FPI portfolios.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related de
