SEBI Proposes Easing Disclosure Requirements for Certain Foreign Portfolio Investors

The Securities and Exchange Board of India (SEBI) has proposed some exemptions to the additional disclosure framework recently introduced for Foreign Portfolio Investors (FPIs). These exemptions aim to reduce the compliance burden for specific categories of FPIs while maintaining transparency in the market.

The Proposed Exemptions:

1. University Funds and Endowments: SEBI proposes exempting university funds and university-related endowments registered as Category I FPIs from the additional disclosure requirements. This exemption applies if the university’s India equity AUM (Assets Under Management) is less than 25% of its global AUM or its global AUM is more than Rs 10,000 crore.
2. Government and Related Investors: The proposal also includes an exemption for government and government-related investors registered as FPIs. Additionally, public retail funds (PRFs) and pension funds may be exempt, subject to the ability of designated depository participants (DDPs) to independently validate their status.

Rationale for the Exemptions:

SEBI believes these exemptions will encourage participation from low-risk and long-term investors like universities and government entities. Additionally, it aims to streamline the compliance process for PRFs and pension funds, which are considered to have relatively lower risk profiles.

Current Status:

The proposals are currently under consideration and open for public comments. SEBI will finalize the framework after considering the feedback received.

Expected Impact:

If implemented, these exemptions are expected to:

• Attract more investments from universities and government bodies.
• Reduce the compliance burden for specific FPI categories.
• Maintain transparency in the market through alternate validation methods.

Conclusion:

SEBI’s proposed exemptions aim to strike a balance between regulatory oversight and promoting ease of doing business for certain FPI categories. The final framework, after considering public feedback, will determine the specific details and implementation timeline.

(The author is Naveen Panwar, and the views expressed in this article are his own)