Sebi's New Disclosure Rules: A Relief for Smaller FPIs

In a significant move, the Securities and Exchange Board of India (Sebi) has doubled the asset threshold for foreign portfolio investors (FPIs) requiring additional disclosures. The new limit is set at Rs 50,000 crore, up from the previous threshold, marking a pivotal change in the regulatory landscape.

Why the Change?

The decision comes in response to the growing market size and the observation that trading volumes in the cash market have more than doubled between FY23 and FY25. This adjustment aims to streamline the disclosure process while ensuring market integrity.

Enhanced Transparency and Compliance

FPIs exceeding the Rs 50,000 crore equity AUM in Indian markets are now mandated to disclose detailed information about all entities holding any ownership, economic interest, or control. This measure is designed to prevent large-sized FPIs from disrupting market stability.

Additional Regulatory Updates

Sebi also announced changes regarding public interest directors and key managerial personnel, including the removal of the cooling-off period for officials moving to competing entities. Furthermore, investment and research advisers can now charge fees in advance for up to one year, offering more flexibility in client agreements.

Sebi Chairperson Tuhin Kanta Pandey emphasized the regulator's ongoing efforts to ensure PSUs comply with minimum public shareholding norms, despite the challenges in reducing government stakes promptly.