SEBI Board Meeting Highlights: SEBI moves to simplify IPO documents as long DRHPs confuse investors, says Tuhin Kanta Pandey

Amarjeet Singh, Board Member SEBI: SEBI on streamlining the borrowing framework for ETFs equity

Going forward, if we introduce a closing auction mechanism for institutional players, primarily FPIs and mutual funds, the system needs to have the flexibility to allow borrowing. This is one reason why we’ve enabled this feature, and we will continue to implement it moving forward.

The goal is better execution and, consequently, lower tracking error.

Additionally, when executing trades during rebalancing, there can be timing mismatches with cash and your cash may be held at the bank and only become available later. There is no actual risk in this, but having the ability to access the cash earlier is an enabling provision.

It allows you to execute trades properly without scrambling, especially given the frequent gaps between secondary market ETF prices and their NAVs.

SEBI Chair Tuhin Kanta Pandey on IPO pricing

Do not want to comment on pricing. Our stance is that the markets are there, markets are free people should choose and there should be greater information and greater education.

SEBI Chair Tuhin Kanta Pandey

There is broad agreement on implementing an automated framework to improve the process.

Public disclosure of certain employees’ assets and liabilities has been suggested, which raises privacy concerns.

Internally, the required information is already being collected and monitored, though the processes could be improved.

A distinction exists between movable and immovable assets, as well as liquid versus non-liquid assets, and this must be balanced with transparency requirements.

SEBI Chair Tuhin Kanta Pandey

Today, the board decided to enhance transparency in leveraged transactions. The price at which shares were purchased in the past year, pre-IPO deals, and the volume-weighted average cost of equity over the last three years will now be clearly disclosed.

This makes the information immediately visible without digging through documents, enabling investors to assess valuations and decide whether to subscribe based on informed debate and discussion.

SEBI Chair: Indian markets have to mature. Indian investors have to mature that and not really typically go with the herd mentality

SEBI Chair Tuhin Kanta Pandey

Capital formation can take multiple models, and there is no single correct way to raise capital.

Capital can therefore come at different stages, and this diversity is part of healthy capital formation.

India’s capital markets are mature enough to accommodate different investor types and risk profiles.

SEBI’s role is to enable various forms of risk capital while ensuring investor protection through clear disclosures and tailored regulations.

For example, for loss-making companies, the minimum retail allocation is deliberately set at 10%, recognizing that not all investors can fully assess complex revenue or profit multiples.

Intervention is warranted only in cases of egregious violations, not to impose a single model of capital raising.

Market participants should be allowed to structure deals, allocate risks, and determine pricing, as long as investor protections are in place.

This approach allows capital to flow efficiently, encourages innovation, and supports a variety of business models without artificially constraining how funds are raised.

Regarding anchor investors, SEBI focuses on transparency and protections rather than prescribing exact participation models.

SEBI Chair Tuhin Kanta Pandey

On the brokerage side, stakeholders highlighted that sell-side research is often bundled with brokerage costs. Unbundling this, as initially proposed, would have required paying lower brokerage and for research separately. However, this model is not feasible today, and attempts to implement it elsewhere were unsuccessful. It led to a decline in sell-side research coverage, which is detrimental not only to brokerage clients but also to retail investors who rely on such research for independent investment decisions.

SEBI Chair Tuhin Kanta Pandey

When we say this is the caps, which means the maximum, it means that you can still offer lower if you want to attract the people to your mutual fund.

You can even offer lower than this; you can afford it, if you can support the cost, technology if you can do that you can offer it lower.

SEBI Chair Tuhin Kanta Pandey: On the impact on profitability for MFs, we have heard all sides, and the current decision is not as radical.

SEBI Chair Tuhin Kanta Pandey on high-value debt (HVD) listed entities

HVDs are currently defined as entities with outstanding non-convertible debt of Rs 1,000 crore or more. This threshold is quite low compared to the debt raised by many entities, such as NBFCs, and creates a constraint. The threshold is therefore being raised to Rs 5,000 crore as an ease-of-doing-business measure.

High-value debt listed entities are subject to additional corporate governance requirements, which increase costs and can discourage participation.

The proposal also seeks to align these corporate governance measures with those applicable on the equity side.

Harmonizing these provisions ensures consistency for issuers listed on both equity and debt markets. For example, skill-based requirements for related party transactions (RPTs) applicable on the equity side will now also apply to high-value debt.

Relating to the high level committee on conflict of interest, the board deliberated on this matter, and it's an acknowledged that there is a comprehensive review, which has been carried out and expressed that we need to have a detailed discussion on the recommendations in the ensuing meeting, keeping in view public and media comments, certain concerns expressed by employees:  SEBI Chair Tuhin Kanta Pandey

SEBI Chair Tuhin Kanta Pandey on CRA

Entities must segregate business processes so that investment protection and other SEBI benefits do not apply to non-SEBI-regulated activities, make this distinction explicit to clients, and maintain separate communication channels, such as a dedicated email ID, for these clients.

Subject to these conditions, entities can legally undertake these activities, which is expected to benefit the economy.

This also applies to unlisted entities and subsidiaries of listed companies, where earlier regulations made consolidated compliance, including subsidiaries and unlisted entities, difficult.

Overall, this is an ease-of-doing-business measure, implemented with appropriate risk mitigation.

SEBI Chair Tuhin Kanta Pandey on CRA

The credit rating agencies, which are regulated by SEBI and also fall under the purview of other financial sector regulators. There was a difficulty faced by the industry in this because of the absence of guidelines.

SEBI chair Tuhin Kanta Pandey on Pre-IPO

On automatic lock-in for pre-issue capital. Currently, promoters’ shares are locked in for six months, and there is also a requirement for non-promoter shares to be locked in for six months.

To address this, provisions in the ICDR have been amended to allow depositories to handle pledges directly. This will enable automatic lock-in of shares even when they are pledged, simplifying compliance for companies.

SEBI chair Tuhin Kanta Pandey on public issues

At the draft stage, a draft abridged prospectus will also be made available along with a QR code. This was a suggestion from public feedback, and it will allow investors to easily access all announcements and key information related to the IPO.

The goal is to help investors quickly assess relevant information without having to go through the voluminous full document, while still providing complete information for those conducting detailed research.

The only change from the consultation paper is that, instead of highlighting a separate summary, the abridged prospectus will now be provided at the draft stage itself.

SEBI Chair Tuhin Kanta Pandey on public issues

One key concern is that IPO documents, particularly DRHPs, are often very lengthy, making it difficult for investors to focus on the most important information. During the consultation, it was suggested that a summary document be provided.

The board has now decided that this objective can be better achieved through an abridged prospectus. An abridged prospectus is already a legal requirement under Section 33 of the Companies Act, so it cannot be removed.

SEBI Chair Tuhin Kanta Pandey on MF regulation

An important objective of this exercise was to enhance transparency. Since taxes and levies are subject to change over time, they should not remain embedded in the TER. In the current framework, some components were embedded while others were not, which led to confusion.

SEBI chair Tuhin Kanta Pandey on MF regulation

• There has also been a significant reduction in length of approximately 44%, from 162 pages to 88 pages. The word count has been reduced by about 54%, from nearly 67,000 words in the current regulations to around 31,000 words in the new regulations.
• Key highlights include improved clarity on statutory levies and expense ratio limits, which are now referred to as the Base Expense Ratio.
• Based on feedback from industry balanced call has been taken on brokerage limits

Compliance eased through provisions such as joint inspections and allowing electronic maintenance of books of accounts.

Criteria for qualified stock brokers rationalised, with enhanced supervision focused on brokers with larger client bases and higher trading volumes.

Stock exchanges designated as first-line regulators, with revised reporting of non-compliance, financial statements and book-maintenance details to exchanges.

Regulations reorganised into 11 chapters, covering all critical aspects of stock broker regulation

Key definitions updated (including clearing member, professional clearing member, proprietary trading member, proprietary trading and designated director) to provide clarity.

SEBI Board approves replacement of SEBI (Stock Brokers) Regulations, 1992 with SEBI (Stock Brokers) Regulations, 2025

SEBI approves SEBI (Mutual Funds) Regulations, 2026, replacing the 1996 framework after a comprehensive review.

Statutory levies (STT/CTT, GST, stamp duty, SEBI and exchange fees, etc.) to be charged on actuals, over and above BER

Additional 5 bps expense allowance linked to exit loads removed

Brokerage caps have been rationalised

Cash market trades capped at 6 bps (exclusive of levies)

Derivative trades capped at 2 bps (exclusive of levies)

Total Expense Ratio (TER) to now comprise BER, brokerage, and statutory/regulatory levies

The board of SEBI on Wednesday approved changes to mutual fund fee structures aimed at providing more transparency to investors.