Sebi plans new asset class for high-risk investors


The capital markets regulator Securities and Exchange Board of India (Sebi) is looking at to introduce a new asset class, something between portfolio management services (PMS) and mutual funds, to cater to investors with a high-risk appetite. 

Speaking at the sidelines of Confederation of Indian Industry’s Global Economic Policy Forum, Sebi chairperson Madhabi Puri Buch said on Friday that the regulator is discussing the issue of a new asset class with industry and other stakeholders. “We see room for an asset class between PMS and mutual fund,” Buch said.

“That’s what we are discussing with the industry, what will this asset class look like, what should the benefits and risk mitigation for investors be,” she added.

The proposed category will likely to have a higher minimum investment and relaxed norms to generate high returns.

Earlier in October, the Sebi had written to the Association of Mutual Funds in India (AMFI), seeking the views of individual asset management companies (AMCs) on a new mutual fund category, Mint reported.

Buch also said that the Sebi is working on a roadmap for the same-day settlement of trades by March 2024, followed by an optional parallel system for instant settlement. “We are now moving to optionally T+0,” she said.

“It will happen before the end of this financial year and one year from there, it will be instantaneous,” she added.

Currently, trades in India are settled in ‘T+1’ or one day after the trades are initiated. T+0 would enable settlements on the same day.

Instant settlement would ensure trades are settled immediately.

When implemented, India will be the second country after China to operate on a short settlement cycle of one day as settlements in most major economies are completed within two days.

Buch said the Sebi is engaged with investors, including a large number of foreign investors including pension funds, to make investments in REITs (Real Estate Investment Trust) and InvITs (Infrastructure Investment Trust) easier.

“We think REITs and InvITs are very good products for retail investors as they have the ability to give you inflation proof income,” she said.

“The government would like to get more and more funding from REITs and InvITs, so we are engaged with them (investors) to see what it is they need in (terms of) the regulations,” she added.

Recently, the Sebi approved a framework for facilitating small and medium REITs. REITs are usually companies that own, operate, or finance income-generating real estate. 

InvITs are investment instruments, similar to mutual funds, which enable direct investment in the infrastructure sector. 

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Published: 08 Dec 2023, 03:22 PM IST

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