SEBI Board Meet Today: PMS Overhaul, Faster Settlement Rules on Agenda

The Securities and Exchange Board of India (SEBI) is set to hold its quarterly board meeting in Mumbai on Thursday, September 24, with changes to portfolio management services, settlement rules, alternative investment funds and debt-market regulations among the proposals expected to come up for discussion. 

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One of the key items on the agenda is a proposed mutual fund-only portfolio management services category. The framework could allow portfolio managers to build portfolios entirely from mutual fund schemes and specialised investment funds. 

The board is also expected to consider changes covering accredited investors, alternative investment funds, non-convertible debentures and settlement of regulatory cases. 

Minimum investment for MF-PMS could fall to ₹25 lakh 

Under the proposed mutual fund-focused PMS framework, the minimum investment threshold could be reduced to ₹25 lakh from the existing ₹50 lakh. 

The net-worth requirement for applicants offering MF-PMS could also be lowered to ₹2 crore from ₹5 crore. 

If considered and approved, the framework would create a separate PMS category focused specifically on investments in mutual fund schemes and specialised investment funds. 

These changes remain proposals and should not be treated as final regulations until SEBI takes a decision. 

Accredited investor framework may be widened 

SEBI may also consider expanding the pool of investors who can qualify as accredited investors. 

Under the proposal, individuals holding at least ₹5 crore in securities-market assets could qualify for accredited-investor status. 

Investment managers could be permitted to determine an investor’s eligibility during the onboarding process. Such accreditation could remain valid for three years for products offered by the same manager or group. 

Accreditation agencies would continue to provide portable accreditation. 

The proposal also includes deemed accredited-investor status for Persons Resident Outside India, including foreign portfolio investors. 

Faster settlement route may cover cases up to ₹10 lakh 

Another proposal expected to come before the board involves a faster settlement mechanism for regulatory cases involving amounts of up to ₹10 lakh. 

The proposed route is intended to address lower-value enforcement matters more quickly. 

SEBI may also consider allowing settlement applications in cases already pending before the Securities Appellate Tribunal or the Supreme Court. 

The board is also expected to be informed about a fourth settlement scheme covering Illiquid Stock Options matters. 

A number of these cases remain pending before the Securities Appellate Tribunal and within the adjudication process. 

SEBI may change AIF investor consent requirements 

Alternative investment funds could also see changes to their investor-consent framework. 

SEBI is expected to consider standardising the consent requirement at 75% by value for specified decisions, replacing the lower two-thirds threshold. 

Another proposed change would replace the existing “associate” test with a broader “related party” definition covering areas including directorship and control. 

First-time NCD issuers may get compliance relief 

SEBI may consider easing listing requirements for companies issuing non-convertible debentures for the first time. 

The proposal could remove the requirement for retrospective listing of outstanding unlisted NCDs issued by such companies. 

Earlier debt could consequently remain unlisted, while mandatory listing requirements would continue to apply to future issuances. 

The board may separately consider removing the mandatory merchant banker requirement for small-value private debt placements. 

A credit risk-o-meter for debt securities is also among the proposals expected to be discussed. 

FPIs could get access to non-agricultural commodity derivatives

Foreign portfolio investors could be allowed to participate in non-agricultural commodity derivative contracts for the first time under another proposal cited in the report. 

The measure would expand the categories of India’s commodity derivatives market available to overseas portfolio investors. 

SEBI’s board is also expected to discuss a common advertisement code across regulated entities. 

The proposed framework could allow celebrity endorsements under specified conditions. 

Another item under consideration is a framework permitting depository receipts for real estate investment trusts and infrastructure investment trusts to trade on international exchanges. 

Rupee opens at 95.83 against the dollar

Away from the regulatory agenda, the rupee opened at 95.83 against the US dollar on Thursday, compared with Wednesday’s closing level of 95.74. 

Precious metals were also in focus. As of Wednesday, 24-karat gold was priced at ₹15,332 per gram, while 22-karat gold stood at ₹14,054 per gram. 

Silver was priced at ₹249.90 per gram, equivalent to ₹2,49,900 per kilogram. 

For the day, however, attention remains centred on SEBI’s board meeting and the range of regulatory changes placed before it. The measures covering PMS, accredited investors, AIFs, NCDs and settlement procedures remain proposals at this stage, with their final form dependent on decisions taken by the regulator.