One of the key decisions was an overhaul of the portfolio managers framework, including the introduction of a new route called Portfolio Managers Route for Investment in Mutual Fund Units (PRIM).
Under PRIM, portfolio management services (PMS) providers will be able to invest clients’ money directly in mutual fund schemes and specialised investment funds (SIFs). Existing PMS providers can offer the route through a separate investment approach, subject to a minimum ticket size of ₹25 lakh.
The regulator has also permitted PMS providers to invest up to 10% of a client’s assets under management in investment-grade unlisted debt securities under discretionary PMS, provided the client gives consent.
The revised framework will further allow PMS providers to participate in initial public offerings (IPOs), primary debt issuances and exchange-traded derivatives. SEBI has also simplified the language of the regulations and removed provisions it considers redundant.
Settlement rules get a revamp
SEBI has also approved changes to its Settlement Proceedings Regulations, including a revised approach to settlement terms, a new formula for determining settlement amounts and separate treatment of wrongful gains.
Under the new framework, SEBI will generally issue a settlement notice before a show-cause notice, giving an entity 60 days to submit a settlement application. The notice will not be issued in cases where an interim order is contemplated.
The regulator will also introduce a fast-track settlement mechanism for disclosure-related violations where the settlement amount is up to ₹10 lakh.
The revised rules will additionally provide a framework for settling cases involving misrepresentation of financial statements and diversion of funds.
FPIs get wider commodity access
The SEBI Board has also approved wider participation by FPIs in exchange-traded commodity derivatives.
FPIs will be allowed to participate in non-agricultural index derivative contracts, irrespective of whether the underlying is cash-settled, as well as non-cash-settled non-agricultural commodity derivative contracts.
However, FPIs trading in non-cash-settled non-agricultural commodity derivatives will have to exit their positions before any delivery obligation arises.
Other SEBI Board meeting decisions
The Board also approved several measures aimed at easing compliance requirements and improving the functioning of capital-market intermediaries.
For research analysts and research entities, SEBI has relaxed the requirement to maintain call recordings of communications with clients that are institutional investors.
The Board also approved a common advertisement code for certain regulated entities. The framework will allow celebrities to be used for brand-level or entity-level promotions, while doing away with certain mandatory prior approvals. Advertisements featuring celebrity endorsements will continue to require prior approval.
Among other decisions, SEBI approved changes to the Vault Managers Regulations, ease-of-doing-business measures for real estate investment trusts (REITs) and infrastructure investment trusts (InvITs), and reforms to the accredited investor framework.
The Board also approved a relaxation in the mandatory listing requirement for all outstanding unlisted non-convertible debt (NCD) securities of an issuer planning to list NCDs for the first time.