Market regulator SEBI’s board approved measures on Monday to enhance ease of doing business, including allowing Foreign Portfolio Investors (FPIs) net settlement of funds for intraday cash market transactions. Additionally, amendments to AIF Regulations were greenlit to address scenarios where a scheme or AIF can retain liquidation proceeds post-tenure completion. SEBI also endorsed a framework to classify certain AIFs as ‘inoperative funds’ with reduced compliance requirements until surrendering their registration certificate, all aimed at improving business operations.
The relaxation for FPIs, effective by December 31, 2026, targets reducing liquidity pressure and funding costs, especially during high-volume trading events like index rebalancing. Currently, FPIs settle transactions with custodians on a gross basis, incurring additional costs such as funding expenses and foreign exchange slippages. Notably, concerns about market influence from large FPI positions or speculative trading activities are addressed as non-outright transactions will still be confirmed and settled on a gross basis.
SEBI also lowered the minimum investment value by individual investors in social impact fund SIF under AIF Regulations 2012 to encourage retail participation. This adjustment aligns the minimum application size for Zero Coupon Zero Principal Instruments under SEBI Regulations with the individual investor’s minimum investment value in the Social Impact Fund, as highlighted by the market regulator.
Another business-friendly move by SEBI involves allowing InvITs to retain investments in SPVs even after the conclusion or termination of the concession agreement. This decision aims to offer additional investment avenues for temporary fund deployment by InvITs and REITs, mitigating concentration risks by permitting investments in units of liquid mutual fund schemes with a credit risk value of at least 10.
