Sebi's New Framework for FPIs

The Securities and Exchange Board of India (Sebi) has announced a significant easing of disclosure norms for foreign portfolio investors (FPIs) by doubling the asset threshold for granular beneficial ownership disclosures from Rs 25,000 crore to Rs 50,000 crore. This decision reflects the substantial growth in the market size, with cash equity trading volumes more than doubling between FY 2022-23 and FY 2024-25.

Revised Threshold and Disclosure Requirements

Under the new framework, FPIs holding more than Rs 50,000 crore of equity assets under management (AUM) in Indian markets are now required to disclose detailed information about all entities holding any ownership, economic interest, or exercising control, on a full look-through basis. The revised threshold and disclosure requirements are effective immediately, following Sebi’s board approval last month.

Exemptions and Conditions

Certain FPIs, including those with a broad-based, pooled structure or government-related investors, are exempt from these additional disclosure requirements, subject to specific conditions. The size criteria aim to prevent large FPIs from circumventing the stipulations of Press Note 3, ensuring transparency and accountability in ownership and control to protect the orderly functioning of the Indian securities markets.