Context:
Under the leadership of Tuhin Kanta Pandey, the Securities and Exchange Board of India (SEBI) is adopting a more deregulated, governance-focused approach, moving away from rapid regulatory tightening.
- Emphasis on evaluating the “costs” of regulatory changes
- Focus on nuanced, clear, and business-friendly regulations without compromising risk management
Key Changes Announced at SEBI’s Latest Board Meeting
- Deferred oversight on the appointment of Key Managerial Personnel (KMPs) in Market Infrastructure Institutions (MIIs)
- Postponed stricter norms for investment bankers and custodians due to concerns over complexity and cost
- Relaxed advance fee collection rules for research analysts and investment advisers from the earlier 3-6 month limit to one year
- Eased norms for Category II Alternative Investment Funds (AIFs) by broadening their investible scope in the debt segment
- Scrapped the rule mandating merchant bankers to transfer non-listed business to subsidiaries
- Removed the requirement for SEBI approvals for KMP appointments at MIIs
Earlier Steps Ahead of Board Meeting
- SEBI had already eased “skin in the game” rules for mutual fund employees, adopting a flexible approach to attract talent
SEBI’s New Playbook: Key Themes
- Mindful consideration of regulatory costs
- Alternative risk-mitigation strategies
- Preference for effective and optimal regulations over overly rigid frameworks
- Deferment of complex proposals to allow refinement and industry engagement
- Relaxation of previously imposed stringent advance fee norms
- Governance over micromanagement — reducing regulatory burden where unnecessary
