The SEBI board under new Chairman Tuhin Kanta Pandey which met on Monday was focused on easing regulations and approved doubling AUM threshold for additional disclosures by FPIs, extended the fee collection time period for research analysts and investment advisors to one year, while deferring merchant banking regulations.
In a significant move, the SEBI board has approved increasing the threshold for granular disclosures by FPIs from the current ₹25,000 crore to ₹50,000 crore in AUM in the securities market. “Market depth has increased dramatically from ₹58,000 crore to ₹1,18,000 crore. So we have simply increased the limit. We did not see any situation of any certain FPIs giving trouble or not adhering to regulations,” said SEBI whole-time member Anant Narayan.
A major development was the formation of a high-level committee to review corporate governance standards within the organisation, including conflicts of interest and disclosures by board members.
Conflict of interest
Briefing the media after his first board meeting as the SEBI chairperson, Pandey said, “There are issues related to conflict of interest, there are also issues related to disclosures, also property investments, liabilities, how it is to be reported. So, the high level committee needs to be constituted away from setting up an independent committee.”
“There is a certain trust that needs to be built up. And secondly, people both in our organisation and outside, they need to be clear that things are fine. There is no tendency to hide,” said Pandey. He also said that the board has taken a “conscious decision to move towards more transparency at the cost of privacy.” The HLC is expected to be “self-regulated” by SEBI.
Another surprise move was deferring the proposals to amend merchant bankers, debenture trustees, and custodian’s regulations, which were approved in the previous board meeting. The board is now planning to review and evaluate alternative approaches rather than hiving off activities not regulated by any regulator or authority, as originally approved. Pandey said that SEBI is open to reviewing existing regulations, which have been approved or implemented, to make them easier and facilitate ease of doing business.
Some of the other measures approved were extending the fee collection time period for research analysts and investment advisors to one year. The regulator has also permitted Category II alternative investment funds (AIFs) to invest a larger portion of their assets in listed debt securities with credit ratings of ‘A’ or below.
The regulatory board also approved provisions related to public interest directors (PIDs) of MIIs, leaving it up to the MII to prescribe a cooling-off period for PIDs transitioning to another MII. This has been brought on par with rules for MDs of MIIs.
