The Securities and Exchange Board of India (SEBI) board is scheduled to meet on September 24 and may consider an overhaul of settlement regulations and portfolio management services (PMS), a common advertisement code for regulated entities and allowing foreign portfolio investors (FPIs) greater access to commodity derivatives, according to people familiar with the matter.
The board may also take up proposals relating to depository receipts for REITs and InvITs, expansion of the regulatory framework for vault managers and changes to debt market rules, among others.
MF portfolios
The markets regulator has proposed a comprehensive review of regulations governing portfolio managers, including allowing mutual-fund-only PMS wherein portfolio managers could offer professionally managed portfolios comprising mutual fund schemes.
It has also suggested widening the investment universe available to PMS firms, including permitting investments in yet-to-be-listed securities and allowing discretionary portfolio managers to invest up to 10 per cent of a client’s assets under management in investment-grade unlisted debt securities.
Settlement overhaul
SEBI has also proposed an overhaul of the settlement framework, including changes aimed at rationalising settlement amounts and speeding up smaller cases. The proposals also seek to allow settlement at later stages of proceedings, including when a matter is before the Securities Appellate Tribunal or the Supreme Court, and introduce a fast-track route for specified violations and cases involving settlement amounts of up to ₹10 lakh.
Other changes include issuing settlement notices before show-cause notices in certain cases, extending the time to apply for settlement after a show-cause notice from 60 days to 90 days, and reducing the additional amount payable for refiling a withdrawn settlement application from 50 per cent to 20 per cent.
FPI expansion
Another proposal seeks to widen FPI participation in exchange-traded commodity derivatives. SEBI has proposed allowing FPIs to participate in non-agricultural commodity index derivatives and in non-agricultural commodity derivative contracts that are settled through physical delivery, subject to prescribed conditions.
The board may also consider SEBI’s proposed common advertisement code for regulated entities, which seeks to bring advertising requirements for different regulated entities under a common framework and includes provisions allowing celebrity endorsements by regulated entities subject to conditions.
The regulator has also proposed expanding the scope of its Vault Managers Regulations, 2021, which currently govern vault managers providing services for electronic gold receipts traded on recognised stock exchanges.
Separately, SEBI has proposed enabling depository receipts against units of REITs and publicly listed InvITs, which could allow these units to be accessed by investors through overseas markets.