Key Takeaways from SEBI's Investor Meeting
In a pivotal meeting on September 30, 2024, the Securities and Exchange Board of India (SEBI) unveiled several key reforms aimed at facilitating market operations, enhancing investor protections, and boosting market efficiency
SEBI Meeting
The meeting marks SEBI's first major board session since allegations against Chairperson Madhabi Puri Buch by a U.S.-based short seller. The decisions made are intended to strengthen capital markets and improve transparency.
One of the most significant changes is the introduction of an optional T+0 settlement for stock trades. Stockbrokers can now offer this faster settlement cycle to investors, providing quicker access to funds and improving liquidity and trading efficiency. Although immediate settlement isn’t imminent, the number of eligible securities for the T+0 option will gradually increase to include the top 500 companies by market capitalisation.
SEBI also announced accelerated timelines for rights issues, reducing the average processing time from 317 days to just 23 working days. This change will enable companies to raise capital more quickly, making rights issues a more appealing fundraising option. Additionally, the requirement to file a Draft Letter of Offer with SEBI for rights issues has been eliminated, allowing companies to work directly with stock exchanges for quicker approvals. To ensure transparency in the use of proceeds, all rights issues will now require the appointment of a monitoring agency.
The meeting also introduced new investment products in the mutual fund sector, termed 'Investment Strategies,' which aim to bridge the gap between mutual funds and Portfolio Management Services (PMS). With a minimum investment limit of INR 10 lakh, these strategies provide more flexibility and cater to investors with a higher risk tolerance, addressing the demand for customisable investment options.
To ease disclosure requirements for listed companies, SEBI has implemented new measures. Companies will now have three hours, rather than 30 minutes, to disclose the outcomes of board meetings held after trading hours. Furthermore, firms will have 72 hours to report litigations or disputes, provided they maintain a structured digital database.
SEBI has also expanded its insider trading regulations, broadening the definition of "connected persons" to include individuals living with or related to these persons, such as partners or employees in firms where a connected person has a stake. This amendment is designed to combat insider trading by closing loopholes that previously allowed indirect involvement.
In another market-friendly initiative, SEBI introduced the "Mutual Funds Lite" (MF Lite) framework, which simplifies regulations for passively managed mutual fund schemes. This framework aims to lower entry barriers, attracting new participants to the mutual fund market and offering more choices for investors while streamlining compliance for trustees.
