Continuing its efforts to further strengthen and deepen the capital market, Sebi on Monday approved stricter eligibility norms for investment advisers, capped their fees as well as green signalled regulatory sandbox for live testing of new products.
Sebi board, which met for the first time after presentation of the 2020-21 Union Budget, also cleared amendments to fast track issuance of units to existing investors by REITs and InvITs.
Addressing media after the meeting here, Sebi Chairman Ajay Tyagi, whose current tenure is ending later this month, said the regulator is actively looking at re-categorising mid-cap and small cap mutual fund schemes.
Under the revised framework for investments, those dealing in distribution of securities would be barred from using titles like independent "financial advisers" or "wealth advisers", unless they are registered as investment advisers also.
An individual adviser cannot provide distribution services, while firms would need to segregate advisory and distribution activities at client level to avoid conflict of interest, as per the watchdog.
The new rules, framed after considering four consultation papers and public comments, also seek to bring in more clarity in payment of fees and introduction of upper limit on fees charged to investors.
As part of measures to facilitate latest fintech innovations in the market, Sebi would permit live testing of new products, services and business models on select customers.
Besides, a cross domain approach for the regulatory sandbox would be allowed, wherein a regulated entity can test solutions even for those activities for which it is not registered.
Among others, changes in investment manager eligibility norms for Infrastructure Investment Trusts (InvITs) have been approved, a move that would help a mega offering worth an estimated Rs 20,000 crore by the National Highways Authority of India (NHAI).
Asserting that whatever action is required would be taken, Tyagi said the watchdog would soon come out with a circular to prevent incidents like Karvy Broking Services Ltd (KSBL), which had allegedly misused clients's securities.
Last November, the watchdog barred KSBL from taking new brokerage clients after it was found that the brokerage firm had allegedly misused clients' securities.
According to him, only half of the top 500 companies complied with mandate to segregate the post of Chairman and Managing Director and practicalities resulted in Sebi extending the deadline by another two years.
In January, Sebi deferred the requirement for splitting post of Chairman and Managing Director of the companies by two years to April 2022.
Reflecting on his current tenure, Tyagi described it as "quite a good experience" and mentioned transparent working ways and consultative approach without "regulatory capture" as among the achievements.
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