SEBI is planning major reforms to attract foreign investors. This includes measures like early registration, reduction in the cost of trading in the cash (equity) segment and making short selling easier. SEBI Chairman Tuhin Kant Pandey gave this information on November 12. Pandey’s focus has been on simplifying rules for foreign investors, domestic funds and companies.
Tuhin Kant Pandey became the chairman of SEBI in March this year. Since then he has taken several steps to simplify investment rules. SEBI is thinking of reforms at a time when foreign funds are selling in the Indian markets. This year, foreign funds have sold about $17 billion in Indian markets. On the other hand, America has imposed 50 percent tariff on India. This has affected the markets.
The SEBI chairman said, “In my interactions with foreign participants in the country and abroad, I felt that the biggest issue is that our registration process takes a lot of time. This is not acceptable.” He said that we want to reduce it not to one month but to a few days. Measures to simplify the registration process and reduce the time taken in it may increase the interest of foreign funds in Indian markets.
SEBI is also considering taking steps to expand cash (equity) markets. The regulator will consider the margin rules related to trading for this. SEBI Chairman said, “Liquidity has increased in the cash market in the last few years. But, we want to increase it further. Some decisions may also have to be taken regarding margins.” However, he refused to elaborate on this.
The trend of Indian security markets seems different from the global markets. The size of the derivatives market in India is more than 300 times that of the cash market. The main reason for this is the increasing interest in futures and options. Retail investors are doing F&O trading in large numbers. SEBI has expressed concern over this many times. It has taken several steps to discourage trading by retail investors in F&Os.
Pandey said that SEBI has also kept the option of ‘Product Suitability’ rules open. Such measures will make it difficult for retail investors to trade in derivatives considered risky. The regulator is considering some new measures to curb increasing trades in the derivatives market. Pandey said that SEBI first wants to know the impact of the measures that it has implemented.