Securities and Exchange Board of India to introduce regulatory framework for index providers

Besides, the regulator will put in place a new regulatory framework for facilitating SM REITS apart from amending norms to strengthen the protection of investors who have pumped in money into AIFs.

The objective is to help expand the market significantly so that more retail investors can have fractional ownership in REIT units. Image: PTI

On Saturday, November 25, markets watchdog Securities and Exchange Board of India (Sebi) approved a slew of proposals, including providing flexibility to Not for Profit Organisations (NPOs) in raising funds through the social stock exchange and also decided to introduce a regulatory framework for index providers.

Furthermore, the regulator will establish a new regulatory framework to facilitate Small and Medium Real Estate Investment Trusts (SM REITS), as well as change requirements to increase investor protection in Alternative Investment Funds (AIFs).

The decisions were made by the Sebi board during a meeting held here.

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On SM REITS, Sebi Chairperson Madhabi Puri Buch said the objective is to help expand the market significantly so that more retail investors can have fractional ownership in REIT units.

Sebi is open to looking at creating more such products, Buch told reporters after the board meeting.

In a release, the regulator said flexibility will be provided for fundraising by NPOs through the social stock exchange.

In this regard, the minimum issue size in case of public issuance of Zero Coupon Zero Principal Instruments (ZCZP) for NPOs on the social stock exchange will be reduced to Rs 50 lakh from Rs 1 crore.

Among other decisions, a regulatory framework will be introduced for the index providers to foster transparency and accountability in the governance and administration of financial benchmarks in the securities market.

With respect to AIFs, the regulator said, "The mandate for appointment of a custodian, currently applicable to schemes of Category III AIFs and schemes of Category I and II AIFs with corpus more than Rs 500 crore, shall be extended to all AIFs." Buch said the decision to have regulations for index providers was mainly driven by increasing inflows into passive funds, which have taken off in a big manner in the West.

With PTI inputs

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