India’s market regulator, the Securities and Exchange Board of India (Sebi), is preparing to simplify norms for foreign investors to invest in the country, reported Reuters. Sebi said in its annual report that it aims to attract more long-term capital by simplifying rules and improving access.
Last week, Sebi proposed a single-window clearance for low-risk overseas investors. This category would include sovereign wealth funds, government-owned investment firms, and those pooling funds from retail investors.
Sebi also plans to remove redundant compliance requirements. This includes easing disclosure norms and requiring shareholder approval only for minor related-party transactions.
These measures are designed to cut the regulatory burden and encourage more participation from foreign entities.
CYBERSECURITY AND MARKET OVERSIGHT
Reuters noted that Sebi will strengthen its cybersecurity systems to better detect fraud and trading manipulation.
This follows recent enforcement actions, such as barring U.S. trading firm Jane Street from Indian markets over alleged manipulation of stock indices.
Sebi is closely watching unusual trading patterns. Its report data showed that on expiry days for index options, 90% of trading volume happens on that day, and 30% of it occurs in the final hour. Such a concentration of trades raises concerns about volatility and potential manipulation.
Sebi proposed formal rules for algorithmic and proprietary trading, according to Reuters. Until now, these activities have been governed by broad guidelines and circulars. The proposal would integrate them into core stockbroker regulations.
The plan also includes a rule requiring stockbroking firms to have at least one director who resides in India for more than 182 days a year.
Sebi also suggested dropping the older definition of “small investors” that was based on cash transaction limits.
The regulator also reminded markets that retail traders collectively lost Rs 524 billion in the derivatives market during 2024.
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