SEBI board to meet amid allegations against Buch

All eyes will be on the SEBI board when it meets on Monday as it is the first meeting after the Hindenburg Research allegations against chairman Madhabi Puri Buch.

While insiders say the Council is likely to take stock of the allegations, other issues likely to be discussed are proposed measures to restrict retail participation in the futures and options (F&O) segment, regulation for a “lite mutual fund” aimed at passively managed funds, introduction of a new asset class linking portfolio management services (PMS) and mutual funds, and extension of the definition of “ related persons” in the insider trading standards to include certain close relatives.

In August, Hindenburg Research alleged that the market regulator was unwilling to act on its January 2023 Adani report because SEBI chair Madhabi Puri Buch and her husband Dhaval Buch had investments in offshore funds having links with the Adani group. Although Madhabi and Dhaval have vehemently denied the allegations, the SEBI board has remained silent on the issue so far.

Important decisions

Although it is unclear whether the Board of Directors will take up the matter, Monday’s meeting is important from a market perspective as decisions on some important issues are expected to be made. The board may discuss the introduction of a new asset class with a minimum ticket size of ₹10 lakh. The threshold will deter retail investors from investing in the product, while attracting investors with investable funds of ₹10-50 lakh, who are currently attracted to unregistered portfolio management service providers.

SEBI may revise shareholding norms to allow more flexibility in the governance structure of passive mutual funds. This includes potential adjustments to the minimum net worth requirements for AMCs and a reduction in the lock-up period for sponsor shares, in order to attract serious players to the market.