Sebi focuses on improving the quality of information provided to investors

Sebi is looking to set up two new institutions – Performance Validation Agency and Data Benchmarking Institution – to improve the quality of information provided to investors in the securities market. The first institution, Performance Validation Agency, will verify performance claims for services offered by investment advisors (IAs), research analysts (RAs) and algorithm providers.

The Data Benchmarking Institution will provide a central repository of standardized and comparable data across asset classes.

Both the institutions aim to improve the quality of information made available to investors in the securities market, the Securities and Exchange Board of India (Sebi) said in its annual report for 2023-24.

In addition, the regulator has proposed to create a closed ecosystem for the collection of fees by registered investment and investment entities through a separate mechanism that will help investors ensure that their payments reach only registered investment and investment entities and also help them identify, isolate and avoid unregistered entities that would not have access to this closed ecosystem.

Sebi said that one of the focus areas for 2024-25 will be capital accumulation in the real estate and infrastructure sectors and regulations may need to be adjusted to facilitate the development of infrastructure and real estate in the country.

For this purpose, the regulator has set up an advisory committee for real estate investment funds (REITs) and infrastructure investment funds (InvITs) to understand the needs of the market and its stakeholders.

Noting that each segment of infrastructure may require a slightly different solution and a single set of regulations may not work for sectors as large as infrastructure and real estate, Sebi said the regulations may need to be tailored to the products that the industry requires and such an approach can facilitate the development of infrastructure and real estate in the country.

Investing in infrastructure is also of great importance for local municipal authorities, as municipal bonds are becoming increasingly popular as a source of financing for investments in urban infrastructure.

“If companies pursuing democratisation models are supported by thoughtful and innovative policies, a day will come when our REIT, InvIT and municipal bond markets can be many times larger than what they are today,” Sebi noted.

In addition, the regulator has lined up a number of initiatives to be undertaken in 2024-25. SEBI will review the voluntary delisting norms, including the reverse book-building process and consider other alternatives to determine the exit price, to make the voluntary delisting framework more flexible while balancing the interests of all stakeholders in the process.

It proposed the development of a simplified and risk-based framework for transactions concluded by securities brokers and stock exchanges with respect to transactions concluded by clients in the equity and equity derivatives segment.