Indian markets need new asset class, new listings: SEBI member Amarjeet Singh

Amarjeet Singh, whole-time member at SEBI

The Indian stock market needs more assets classes and more listings especially at a time when mutual funds are seeing record fund flows coming from all categories of investors, said SEBI whole-time member Amarjeet Singh.

While speaking at the Moneycontrol Mutual Fund Summit, Singh said that fresh capital raising is a better reflection of the markets and also reduces concerns related to asset price inflation.

"While we are witnessing a lot of money coming to the mutual fund space, we need more listings, more asset class, more fund raising by existing listed companies in the market so that the money which is coming in can be appropriately invested," said Singh while delivering the keynote address at the seminar.

"... fresh paper issuance is clearly a better reflection of fresh capital formation and raises less doubts about asset price inflation," he added.

This assumes significance as the capital market watchdog recently issued a discussion paper, proposing a new asset class aimed at investors with a higher risk appetite compared to a mutual fund investor.

The market regulator has proposed a new asset class that could bridge the gap between Mutual Funds and Portfolio Management Services (PMS-es) in terms of flexibility in portfolio construction. It has proposed that the asset class be allowed to invest even in derivatives for purposes other than hedging and rebalancing.

Through a consultation paper released on July 16, Sebi has proposed that the minimum investment in this asset class be Rs 10 lakh across strategies, that mutual fund houses or asset management companies offer these products, that the products will be riskier than what is traditionally offered by MFs and therefore be branded differently and that all investments permissible to MFs be available to this new asset class.

Meanwhile, in terms of new listings, the current calendar year till July has already seen as many as 40 mainboard issues that collectively raised more than Rs 36,000 crore.