SEBI’s 207th Board Meeting: Bold Reforms for Market Modernization and Investor Protection

 SEBI’s 207th Board Meeting: A Step Towards Market Modernization and Investor Protection with Bold Reforms

The Securities and Exchange Board of India (SEBI) convened its 207th Board meeting in Mumbai, unveiling a series of pivotal decisions aimed at fortifying the Indian financial markets. These measures reflect SEBI’s commitment to enhancing the efficiency, transparency, and overall ease of doing business in the securities market. By addressing key concerns across various segments, SEBI is positioning itself as a forward-thinking regulator, keen on fostering a more investor-friendly environment and promoting sustainable growth in the financial ecosystem.

 Key Approvals from SEBI’s 207th Board Meeting:

 Secondary Market Related Measures 

– Investors in the secondary market, particularly in the cash segment, now have the option to trade using either the UPI block mechanism, akin to ASBA for secondary markets, or a 3-in-1 trading facility. Qualified Stock Brokers (QSBs) will be mandated to offer one of these two facilities.
– The scope of the Optional T+0 Settlement Cycle has been enhanced to promote faster settlements and liquidity, significantly benefiting market participants and improving trading efficiency.

Market Intermediaries Related Measures

– A thorough review of the regulatory framework for Investment Advisers (IAs) and Research Analysts (RAs) was conducted to simplify procedures and facilitate ease of doing business. This will lead to a more dynamic market with increased participation from advisory services.
– SEBI also amended the SEBI (Intermediaries) Regulations, 2008, to expedite the disposal of matters related to specific violations through summary proceedings, streamlining the regulatory process and improving resolution times.

Primary Market Related Measures

– The introduction of a faster Rights Issue process with flexibility in allotment to specific investors was approved under the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. This move will provide companies with a more efficient way to raise capital.
– SEBI also endorsed measures to improve the ease of doing business under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and SEBI (ICDR) Regulations, 2018. These amendments will simplify the listing process, making it more accessible for companies to enter the market.
– Simplifications were introduced in various regulatory frameworks, including the SEBI (Merchant Bankers) Regulations, 1992, SEBI (Bankers to an Issue) Regulations, 1994, and SEBI (Buy-Back of Securities) Regulations, 2018, making capital market transactions more efficient and transparent.

Mutual Funds Related Measures
– SEBI introduced a regulatory framework for a new investment product/asset class, bringing innovation to the mutual fund industry. Additionally, the launch of a liberalized “Mutual Funds Lite” (MF Lite) framework designed specifically for passively managed schemes will simplify compliance and promote more accessible investment avenues.

Alternative Investment & Foreign Portfolio Investors (FPI) Related Measures

– The Board approved granting pro-rata and pari-passu rights to investors of Alternative Investment Funds (AIFs). This change will bring greater fairness and equality to the distribution of profits and assets among investors in AIFs.
– Offshore Derivative Instruments (ODIs), previously known as P-Notes, and segregated portfolios of FPIs will now be subject to the same disclosure requirements as FPIs, ensuring transparency and regulatory compliance in offshore investments.

Investor Related Measures

– To enhance convenience for market participants, SEBI introduced investor-friendly and uniform norms for nomination facilities in the Indian securities market. These changes will simplify the nomination process and provide greater ease for investors.

 Integrated Surveillance Related Measures

– SEBI made amendments to the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (PIT Regulations), refining the definitions of ‘connected person’ and ‘immediate relative’ to provide greater clarity. These changes aim to safeguard the market against insider trading while promoting fair practices.

Debt and Hybrid Instruments Related Measures

– To facilitate corporate fundraising, the scope of the Sustainable Finance Framework in the Indian securities market was expanded through amendments to the  SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021. This move will support the growth of environmentally and socially responsible investments.
– Additional measures to boost the growth of the bond market were introduced, including streamlining compliance for listed Non-Convertible Securities and easing disclosures regarding the appointment of Debenture Trustees in offer documents. These changes are expected to improve the transparency and efficiency of the bond market.

Legal Affairs Related Measures

– SEBI substituted the requirement of attestation by a Notary Public or Gazetted Officer with self-attestation of certain documents across specific SEBI regulations. This move aims to simplify documentation processes and reduce administrative burden on market participants.
– Additionally, SEBI reviewed the Securities and Exchange Board of India (Informal Guidance) Scheme, 2003, to broaden access to informal guidance, thereby providing greater clarity and support to market participants.

 Conclusion
The outcomes of SEBI’s 207th Board meeting demonstrate the regulator’s proactive approach towards improving market operations, investor protection, and ease of doing business. By addressing critical areas such as secondary market trading, mutual funds, and the bond market, SEBI is not only ensuring market efficiency but also safeguarding the interests of investors. These reforms are expected to further modernize India’s securities market, encourage greater participation, and support the broader economic growth trajectory.