SEBI Rolls Out Key Market Reforms

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SEBI Rolls Out Key Market Reforms

  1. New Regulatory Framework for Index Providers:

SEBI has established a regulatory framework for Index Providers, focusing on enhancing transparency and governance in the administration of financial benchmarks. The framework, compliant with the International Organization of Securities Commissions (IOSCO) Principles for Financial Benchmarks, will apply primarily to ‘Significant Indices’. SEBI chairperson Madhabi Puri Buch emphasized that this move aims to streamline the registration process for Index Providers, thereby fostering more accountability in the securities market.

  1. Facilitation of Fundraising for Non-Profit Organizations (NPOs):

SEBI has introduced more flexible guidelines for fundraising by NPOs through the Social Stock Exchange (SSE). The board has lowered the minimum issue size for public issuance of Zero Coupon Zero Principal Instruments (ZCZP) from ₹1 crore to ₹50 lakh and reduced the minimum application size from ₹2 lakh to ₹10,000. This change is intended to encourage broader participation, including from retail subscribers. Additionally, “Social Auditor” has been revised to “Social Impact Assessor” to resonate better with the social sector ethos.

  1. Regulations for Small and Medium REITs (SM REITs):

SEBI will regulate online platforms offering fractional ownership in real estate, categorizing them under the framework for SM REITs. These REITs can create separate real estate asset ownership schemes through special-purpose vehicles. The regulatory framework outlines the structure of SM REITs, including criteria for existing structure migration, investment manager obligations, investment conditions, and asset valuation norms.

  1. Amendments to Alternative Investment Funds (AIFs) Regulations:

SEBI has stipulated that from September 2024 onwards, all new investments made by AIFs must be dematerialized. Existing investments are exempted from this requirement, with certain exceptions. Furthermore, the mandate for appointing a custodian, currently applicable to certain AIF categories, will extend to all AIFs. AIFs may now appoint a custodian affiliated with the AIF manager or sponsor under similar conditions applicable to mutual funds.

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