Mumbai, March 10: In the upcoming first board meeting under the leadership of newly appointed Chairperson Tuhin Kanta Pandey, the Securities and Exchange Board of India (SEBI) is slated to discuss several major regulatory proposals.
The agenda on the cards includes UPI-like protections for demat accounts, ensuring the independence of clearing corporations, expanding the scope of qualified institutional buyers (QIBs), and changes in fee collection by research analysts.
To enhance investor security, the SEBI has proposed implementing a system similar to the Unified Payments Interface (UPI) for demat accounts. The proposal, introduced on February 18, suggests that each investor’s unique client code be linked to the SIM of a mobile phone.
This move aims to prevent unauthorised access, identity theft, SIM spoofing, and fraud. The independence of clearing corporations (CCs) from their parent stock exchanges is another key issue on SEBI’s agenda.
In November 2024, SEBI board member Ananth Narayan highlighted the need for a review of the existing structure. Currently, CCs are fully owned by their parent exchanges in India, while globally, they are often independent public utilities serving all market participants. The market regulator is also slated to discuss stricter rules for ESG (environmental, social, and governance) rating providers.
The proposed changes include rules for rating withdrawals, enhanced disclosures, audits, and governance norms. For ratings under a “subscriber pays” model, the SEBI suggests that withdrawals should only be allowed if there are no active subscribers.
Under the “issuer pays” model, additional conditions such as a minimum three-year rating period and approval from 75 per cent of bondholders before withdrawal have been proposed. SEBI Chairman Pandey last week emphasised that the capital markets regulator is making extensive use of technology to enhance efficiency, transparency, and investor protection.
At a media event, he said SEBI is committed to reducing risks in the system and ensuring a secure environment for investors. “An informed investor is well protected. SEBI’s efforts in the days ahead would be to create awareness among both existing and prospective investors,” Pandey remarked.
The SEBI has proposed broadening the definition of Qualified Institutional Buyers (QIBs) to include Accredited Investors for angel funds. This move, proposed on February 21, would allow angel funds to raise capital beyond the existing 200-investor limit under the Companies Act.
IANS