SEBI has come up with some of the most awaited rules and regulations for foreign investors, alternative investment funds, and investment advisors registered with SEBI, and these rules can bring ease of making investments in the market. Even though the cash equity market trading volumes are surging, the market regulator announced these rules which can further increase the volumes. How these SEBI updates for FPI, AIFs, and IAs will change the market dynamics? Let’s find out. 

Reduced FPI Disclosure Threshold 

The most important rule that SEBI passed during the first board meeting under the new SEBI Chairman Tuhin Kanta is that the threshold for disclosing assets by foreign portfolio investors FPI has been decreased from ₹20000 crore to ₹ 50000 crore. 

Currently, the FPIs having an asset under management (AUM) of more than ₹25000 crore need to submit granular details of the investors or the stakeholders. This if for safeguarding the interest of the investors. 

Now after this change by SEBI, FPIs only having an AUM of ₹50000 crore and above will be required to disclose such details. Also, here the FPI disclosure threshold only including equity assets under management, not other asset classes. However, if the FPI holds more than 50% of its equity AUM in India, then the rule remains unchanged for them and they need to provide granular details post their AUM surpass the ₹25000 crore mark. 

Apart from this FPI Investment change, SEBI has also announced to set up a dedicated committee for reviewing the conflict of interests and disclosures pertaining to investments, liabilities of board members, and property. This committee will also ensure effective transparency, accountability, and ethical behavior and conduct of the officials and members of the board. This move was the need of the hour as the previous Chairperson of SEBI, Madhabi Puri Buch has been alleged due to conflict of interests. 

Relaxation For Alternative Investment Funds 

The next relaxation that SEBI has come up with is for the AIFs or Alternative Investment Funds. According to the new norms, Category II of the AIFs now will invest more of their assets in listed debt securities that have a Credit Rating of ‘A’ or lower. 

This will help the AIFs to diversify their investments and also increase the potential for returns. 

Relaxation for Registered Investment Advisors

Finally, the market watchdog has announced that registered IAs can charge up to one year’s fee as advance instead of current one or two-quarter’s fees they charge. This will help the professionals grow and build their businesses smoothly and offer higher financial flexibility. 

Wrapping up 

So, even amidst the increasing cash market volumes, SEBI has announced these rules which can take the market further up. However, SEBI has made these changes to induce flexibility and ease of investment in the market and make it easier for FPIs to access the Indian equity market, AIFs to diversify their portfolios, and IAs to have a steady income source.

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Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.