SEBI, India's securities regulator, unveiled a set of decisions to boost investment through Small and Medium Real Estate Investment Trusts (SM REITs), strengthen investor protection in Alternative Investment Funds (AIFs), and establish regulatory measures for index providers. The move aims to broaden market participation and transparency while introducing flexibility for not-for-profit organizations in fundraising through social stock exchanges. SEBI's regulatory framework includes a shift to demat form for AIF investments and changes to social stock exchange parameters to encourage wider participation and positive impact assessment.
Earlier this week, the Securities and Exchange Board of India (SEBI) unveiled a series of decisions aimed at fostering investment through Small and Medium Real Estate Investment Trusts (SM REITs), strengthening investor protection in Alternative Investment Funds (AIFs), providing flexibility for not-for-profit organizations (NPOs) in fundraising through social stock exchanges, and establishing a regulatory framework for index providers. SEBIChairperson Madhabi Puri Buch highlighted that SM REITs aim to broaden market participation, allowing more retail investors to have fractional ownership in REIT units, and expressed openness to creating similar investment products. The regulator also introduced measures to enhance flexibility for NPOs, including a reduction in the minimum issue size and application size for public issuance of Zero Coupon Zero Principal Instruments (ZCZP) on social stock exchanges, facilitating wider participation, especially from the retail segment. In an effort to promote transparency and accountability in the governance of financial benchmarks, SEBI approved a regulatory framework for index providers. This initiative, driven by the increasing popularity of passive funds, mandates the registration of entities licensing 'significant indices' based on objective criteria determined by SEBI. Additionally, SEB I emphasized the need for all fresh investments made by AIFs after September 2024 to be held in Demat form, with amendments to AIF rules and an extension of the mandate for the appointment of custodians to all AIFs. Regarding social stock exchanges, SEBI announced a change in the nomenclature from 'Social Auditor' to 'Social Impact Assessor' to convey a positive approach toward the social sector. NPOs will be permitted to disclose past social impact reports in fundraising documents, subject to key parameter disclosures, and more entities will be eligible for registration and fundraising through ZCZP issuance and listing on social stock exchanges. While the board did not address proposed changes in delisting norms due to a need for additional data, SEBI expressed a commitment to revisiting the proposals. Discussions about extending trading hours were inconclusive, with Buch noting that clear views from brokerage and investor communities are still evolving. In summary, SEBI's decisions reflect a comprehensive approach to fostering diverse investment avenues, ensuring investor protection, and adapting to evolving market dynamics, with a focus on transparency, flexibility, and accountability.
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