Among the proposed measures that were expected include limiting the number of options with weekly expirations and raising the minimum contract size. However, it was not to be the case this time.
The regulator has been trying to arrest the massive surge in F&O trading, which is being used for speculative bets, resulting in heavy losses for retail investors.
A recent Sebi study found that 1.13 crore retail F&O traders incurred a combined net loss of Rs 1.81 lakh crore in the last three financial years of FY22-FY24.
Despite no new measures for F&O, Sebi board has approved a series of changes, including new asset class for high networth individuals, MF Lite regulations, reducing timeline for rights issue, raising scrips for T+0 cycle among others.
Table of Contents
Here are top 7 other announcements:
MF Lite Framework
Sebi has approved introduction of liberalised Mutual Funds Lite (MF Lite) framework for passively managed schemes.
Under the MF Lite framework, Sebi has relaxed requirements relating to eligibility criteria for sponsors — including net worth, track record and profitability, responsibility of trustees, approval process and disclosures.
The framework intends to promote ease of entry, encourage new players, reduce compliance requirements, increase penetration, enhance market liquidity, facilitate investment diversification and foster innovation.
New asset class for HNIs
Sebi has also approved a new asset class allowing high net worth investors to invest in riskier regulated products. New asset class to have minimum investment amount of Rs 10 lakh.
The offerings under the new product will be referred to as ‘Investment Strategies’, to maintain clear distinction from the schemes offered under the traditional mutual funds.
The new product aims to provide investors with a professionally managed and well regulated product that offers greater flexibility, higher risk-taking capabilities for higher ticket size, while ensuring that appropriate safeguards and risk mitigation measures are in place.
Reducing timeline for completing rights issue
Sebi has approved norms to enable faster rights issue along with the flexibility of allotment to specific investors and giving an investment opportunity to existing shareholders.
Under the new norms, rights issues should be completed in 23 working days from the date of the issuer’s Board meeting approving rights issues, as against present average timelines of 317 days.
Raising number of scrips to 500 for T+0 cycle
Sebi reviewed the performance of the Beta version of optional T+0 settlement cycle and enhanced its scope by approving an increase in the number of scrips eligible for trading from 25 to top 500 listed companies in terms of market capitalization. This will be done in a phased manner.
Easing norms for investment Advisers (IAs) and Research Analysts (RAs)
The board approved the proposal of review of the regulatory framework for IAs and RAs to provide relaxation in eligibility criteria for registration and simplifying the compliance requirements.
The proposed changes in the regulatory framework are expected to simplify, ease and reduce the requirements of compliance for IAs and RAs as well as bring in regulatory changes commensurate with the continually evolving nature of their businesses.
The measures are expected to accelerate the growth of the number of registered IAs and RAs to cater to the needs of the rapidly increasing number of domestic investors.
Expanding the scope of ‘connected person’ under insider trading rules
Sebi board has approved rationalising the scope of “connected person” under the insider trading regulations. According to Sebi, an insider under the regulations means any person who is either a connected person or having access to unpublished price sensitive information(‘UPSI’).
Under the new changes, Sebi has expanded the scope of connected person by including – i) a firm or its partner or its employee in which a “connected person” is also a partner; and (ii) a person sharing household or residence with a “connected person”
To be deemed immediate relative: the new definition includes (i) spouse of the person; (ii) parent of the person and parent of its spouse; (iii) sibling of the person and sibling of its spouse, iv) child of the person and child of its spouse.
Option to investors to trade in the secondary market
Apart from the above, Sebi has also approved option to investors to trade in the secondary market (cash segment) either using UPI block mechanism (ASBA-like for secondary markets), or 3-in-1 trading facility in addition to the current mode of trading
One of the two facilities to be mandatorily offered by qualified Stock Brokers (QSBs) and other incidental matters.
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