Context:
Tuhin Kanta Pandey, the newly appointed chairman of the Securities and Exchange Board of India (SEBI), has outlined plans for a significant regulatory revamp aimed at easing compliance burdens and making financial norms more relevant to today’s market environment.
Key Announcements and Strategic Priorities
Shift Toward “Optimal Regulation”
- SEBI aims to reduce micromanagement and embrace principle-based regulation.
- The objective is to modernize and rationalize outdated norms to suit current market dynamics.
Regulatory Collaboration
- Active discussions underway with the Reserve Bank of India (RBI) and the Department of Economic Affairs (DEA).
- The goal: streamline foreign investment rules and improve ease of doing business for overseas investors.
FPI-FDI Fungibility in Focus
- SEBI, RBI, and DEA are exploring fungibility between Foreign Portfolio Investment (FPI) and Foreign Direct Investment (FDI).
- Requires changes in Foreign Exchange Management Act (FEMA) rules.
- This could enhance flexibility and attract long-term foreign capital.
Direct Access for Foreign Individuals
- The proposal to allow foreign individuals to invest directly in Indian equities is under consideration.
- Aimed at broadening the base of overseas participation in Indian markets.
Other Highlights
Futures and Options (F&O) Market Regulation
- SEBI has defended recent measures aimed at curbing excessive speculation in the derivatives segment.
- The focus remains on maintaining market integrity and investor protection.
Mutual Fund Fees – No Immediate Change
- SEBI is not currently revisiting the plan to reduce the Total Expense Ratio (TER) charged by mutual funds.
- Suggests a cautious, consultative approach to investor cost reforms.
NSE IPO Clearance
- The long-delayed NSE initial public offering (IPO) could be greenlit, pending “satisfactory resolution” of regulatory and governance concerns.
SEBI’s regulatory roadmap under Chairman Pandey signals a more facilitative and investor-friendly framework, especially for foreign players. By emphasizing modernization, simplification, and regulatory coordination, SEBI is aiming to make Indian capital markets more accessible and globally competitive.
