SEBI Board Meeting: Key Regulatory Changes on the Cards

SEBI Board Meeting F&O Changes, Mutual Fund Lite, SEBI Work Culture

The Securities and Exchange Board of India(SEBI) board meeting today, is slated to bring in a slew of changes across topics, spanning from Norms for Future & Options trading to the introduction of “New Asset Class” and mutual fund lite regulations. Uncertainty surrounding the decisions that might unfold in the meeting led to a minor correction in the markets. Benchmark indices Nifty and Sensex corrected 1% each. Let us look into the elementary changes that SEBI is currently focusing on.

Focus Areas:

1 – In July, SEBI proposed a “New Asset Class”, which would offer investment products between mutual funds and portfolio management services(PMS). This new category, planned for introduction under the mutual fund structure will have a minimum investment limit of Rs 10 Lakhs.

2 – The regulator has also floated a consultation paper to introduce Mutual Fund Lite regulations for passively managed mutual funds. This framework is intended to provide Relaxation in compliance requirements, Increase penetration and Facilitate Investment diversification.

3 – One of the most important changes that a lot of traders are awaiting is the regulatory change that the future and options(F&O) segment might have to undergo. F&O trading has been highlighted as a concern by both government agencies and regulators. To curb speculative trading in the F&O segment, SEBI earlier this year in July proposed a series of measures, including restricting multiple option contract expiries, raising the size of option contracts and intraday monitoring of position limits. The regulator highlighted that it had already received close to 6000 responses to the consultation paper to strengthen the index derivatives framework.

4 – Today’s SEBI board meeting assumes significance as it is the first board meeting since the Hindenburg Research and Congress’ recent allegations of “Conflict of Interest” against SEBI’s chairperson. The other important area that the board might take up is the recent concerns raised by the regulators’ officers on issues around house rent allowance(HRA) and work culture.