Sebi took a big decision for foreign investors the impact can be seen on the stock market

The Indian capital market regulator SEBI has decided to increase the disclosure threshold for foreign portfolio investors (FPIs). Now more than Rs 50,000 crore equity assets under management (AUM) FPIS will have to be given additional information, whereas earlier this limit was Rs 25,000 crore. This decision was taken in a board meeting led by SEBI’s new chairman Tuhin Kant Pandey.

What changed now?

Old rule: FPIS with equity AUM over Rs 25,000 crore had to give details of all its investors/stakeholders.

New rule: Now FPIS with AUM over Rs 50,000 crore will have to do this disclosure.

SEBI said, “Compared to FY 2022-23, the trading volume of the cash equity market has doubled. Therefore, it has been decided to increase the threshold.”

Why was this rule brought?

In the circular of 24 August 2023, SEBI had given 2 conditions to FPIS- if more than 50 percent of a FPI equity AUM is in one corporate group, then it will have to make additional disclosures. Apart from this, FPIs with AUM over Rs 25,000 crore will have to give information about their final investors (Natural Persons). Indeed, its purpose was to ensure the following minimum public shareholding (MPS) and takeover rules, so that there is no market disturbances. Now SEBI made it clear that the investigation related to MPS and takeover rules will continue as before. Also, all FPIS will have to follow PMLA (Money Laundering Prevention Act).

What will this matter?

This will provide relief to big foreign investors FPIs. Actually, now small-matter FPIS will not need much disclosure, which will make their functioning easier. In addition, transparency in the market will increase, that is, the goal of SEBI is to ensure the privacy and rules of investors while keeping the market stable.

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