SEBI Introduces New Asset Class for High-Risk Investors
(Aiming to protect investors and improve investment choices)
The Securities and Exchange Board of India (SEBI) has approved a new asset class targeted at high-risk investors. This initiative seeks to create more flexibility in asset management, filling the gap between mutual funds and portfolio management services.
Key Features:
- Minimum Investment: Investors can start with a minimum of ₹10 lakh across various investment strategies within a particular Asset Management Company (AMC).
- Investor Protection: The new product aims to reduce the risks associated with unregistered investment schemes that often promise unrealistic returns. SEBI's goal is to safeguard investors from financial exploitation.
- Investment Strategies: The new asset class will offer features like Systematic Investment Plans (SIPs) and is designed for those with investable funds between ₹10 lakh and ₹50 lakh. This higher threshold is expected to deter retail investors from participating, thereby attracting more serious
Safeguards:
- No use of leverage.
- Investments in unlisted or unrated instruments will be limited.
- Derivative exposure is capped at 25% of Assets Under Management (AUM), only for hedging and rebalancing purposes.
The Securities and Exchange Board of India (SEBI) has introduced several new rules and updates that will impact the trading and investment landscape significantly:
- Futures and Options (F&O) Changes: SEBI is tightening the rules for derivative trading, effective from November 20, 2024. The minimum contract value for derivatives will now be set between ₹15 lakh and ₹20 lakh. Additionally, there will be a new requirement for upfront collection of option premiums starting February 1, 2025. Weekly options contracts will be limited to one per exchange, and additional margins will be required for short options contracts on expiry days.
- New Asset Class for High Net Worth Individuals (HNIs): SEBI has approved a new investment product that allows asset management companies (AMCs) to offer riskier strategies like long-short equity to HNIs with a minimum investment of ₹10 lakh. This new class of offerings will help bridge the gap between mutual funds and Portfolio Management Services (PMS.
- MF Lite Framework for Passive Funds: SEBI has introduced a relaxed regulatory framework called "MF Lite" for passive mutual fund schemes, which aims to encourage new players and reduce compliance requirements, thereby enhancing market liquidity.
- Streamlined Rights Issues: The timeline for rights issues has been significantly reduced from 317 days to just 23 days. The requirement for filing a draft letter of rights offer with SEBI has been discontinued, streamlining the process and making it more accessible for corporates to raise funds.
- Expanded Insider Trading Regulations: SEBI has expanded the definitions of "connected person" and "immediate relative" under insider trading regulations, which will aid in more effective enforcement against insider trading activities.
- Simplification for Investment Advisers: The eligibility norms for Investment Advisers (IAs) and Research Analysts (RAs) have been relaxed, and qualified stock brokers are now required to offer UPI options for trading.
SEBI believes that this new product will enhance the investment landscape in India by introducing a regulated option that meets the needs of evolving investor profiles