Markets regulator, Securities and Exchange Board of India (Sebi) has proposed changes to the accredited investor (AI) framework. These included allowing investment managers to determine and record an investor’s accredited status as part of the onboarding process.
SEBI also proposed recognising securities market assets as an additional eligibility criterion and extending deemed accredited investor status to all persons resident outside India (PROIs), including foreign portfolio investors (FPIs).
As per the Market regulators’ proposal, the changes would operate as an additional route alongside the existing accreditation agency-based framework.
It also proposed safeguards, including accreditation policies, record maintenance, independent oversight and an accountability framework. The manager-led route would not permit investors to self-certify their accredited status
Notably, accredited investor framework is used to identify a certain class of investors who have the financial capacity and ability to understand and bear the risks associated with complex investment strategies. These investors are given several flexibilities on the regulatory front.
Sebi also proposed adding securities market assets as an eligibility criterion. Individuals with at least Rs 5 crore of such assets could qualify, while the proposed threshold for body corporates is Rs 20 crore.
SEBI estimates nearly 3.7 lakh investors could qualify under the proposed securities-market-asset criterion, compared with around 96,000 existing AIF investors.
According to the SEBI circular, the eligible assets would include demat equity and debt instruments, REITs/InvITs, AIF units, mutual fund holdings, futures open interest, unlisted securities in demat form and overseas securities market investments.
Recently, the SEBI Chairman, Tuhin Kanta Pandey said the markets regulator has not observed any manipulation in the newly introduced closing auction session that determines closing price levels.
“The closing auction is a big market structure reform in line with global standards. We are considering all inputs to increase participation,” Tuhin Kanta Pandey said at an event in Mumbai.
SEBI Eases Accredited Investor Rules, Investment Managers May Verify Status
