Sebi to review FPI compliance norms, issue consultation paper to align rules with global standards
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The Securities and Exchange Board of India (Sebi) will review compliance requirements for Foreign Portfolio Investors (FPIs) and issue a consultation paper on aligning domestic norms with global standards, Chairman Tuhin Kanta Pandey said on Wednesday. The proposed review aims to facilitate greater foreign investor participation in Indian capital markets while retaining safeguards for investor protection and market integrity.
Speaking at the annual a summit, Pandey acknowledged that some Indian compliance requirements remain more onerous than those in other major jurisdictions. The regulator will seek stakeholder views before deciding on potential changes, as India looks to deepen its capital markets and widen the pool of domestic and international capital to meet rising financing requirements.
“We recognise that some compliance requirements in India remain more onerous than those in other major jurisdictions. We are reviewing these requirements and will issue a consultation paper to seek views on aligning them with global standards, while preserving the safeguards needed for investor protection and market integrity,” Pandey said.
Sebi examines FPI access and compliance burden
The proposed consultation follows steps already taken by Sebi to facilitate foreign investor participation, including streamlining market access, easing digital onboarding and simplifying procedures. The regulator has also harmonised several compliance requirements with those in major global jurisdictions.
The review signals a further examination of the balance between regulatory safeguards and the ease of investing in Indian markets. Any changes, however, will be subject to stakeholder feedback and the need to preserve market integrity.
Stock exchange self-listing remains an open question
On whether stock exchanges should be permitted to list on their own platforms, Pandey said the issue was neither off the table nor actively under consideration. Although self-listing is permitted in several global markets, India’s framework must account for the presence of multiple exchanges and potential conflicts of interest.
“Exchanges are also a regulator and if your own scrip is trading, then obviously you can’t be a regulator on your own thing,” he said, adding that the proposal could be revisited with appropriate safeguards.
The issue centres on managing conflicts that could arise when an exchange oversees trading in its own shares while continuing to perform its regulatory functions.
Regional exchanges face commercial viability test
Pandey also addressed the possibility of reviving closed regional exchanges, including the Calcutta Stock Exchange. He said the regulatory framework does not rule out new exchanges, but commercial viability would be crucial.
Electronic trading allows investors to access markets from across India and overseas, making it necessary for any proposed exchange to demonstrate that it can attract sufficient trading volumes to sustain operations.
He also highlighted the need for substantial and continuous investment in technology to manage emerging risks, including those associated with artificial intelligence. Any revival proposal would therefore require a viable business plan, adequate liquidity and a clear rationale for establishing a separate exchange in an increasingly technology-driven market.