The Securities and Exchange Board of India (SEBI) has proposed increasing the threshold for foreign portfolio investors (FPIs) required to make additional disclosures. The current threshold of Rs 25,000 crore in equity assets under management (AUM) is proposed to be doubled to Rs 50,000 crore, considering the significant rise in market volumes.
In a consultation paper released on January 10, SEBI outlined the rationale for the move. It comes as the Indian securities market gets bigger and it is one avenue of ensuring disclosure requirements remain proportionate with market dynamics.
SEBI’s circular explained that the additional disclosure framework for FPIs was put in place to prevent attempts at circumventing Press Note 3 regulations. The latter, notified in 2020, made government approval mandatory for investments from countries sharing a border with India. The framework now requires FPIs with AUM over Rs 25,000 crore to disclose granular information of their investors or stakeholders on a look-through basis.
The consultation paper, therefore, brought out that the potential of FPIs to disrupt market functioning needs to be considered in relation to market size. SEBI, citing data from the capital market segment of NSE, mentioned that there was a 122% increase in average daily turnover between FY 2022-23 and FY 2024-25 (till December 2024). This rise underlines the need for adjusting the disclosure threshold to the increased market size.
The proposal tries to balance regulatory oversight with ease of doing business for FPIs with market stability.
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Source: Moneycontrol
News Desk
