Reviewing SEBI’s 2021

6 mins read
by Angel One

With the raining IPOs, new records in the global market, infusion of new investors, the securities market in India had a busy year of 2021. Since its inception, SEBI has been striving to safeguard the interests of investors by monitoring and regulating the ever-growing securities market in India. Every year, it brings in a slew of measures to assure the investors the securities market is a fairer place to invest. Let us look into what SEBI did in 2021 to make the securities market fairer and transparent to investors.

  1. Products Related

IPO Reforms

As mentioned, 2021 was a year of raining IPOs. But the stock market witnessed extreme price volatility in the shares after the listing debut, causing panic among the investors. This made SEBI introduce the following reforms in IPO to bring in stability after the issue and rationalize the IPO prices :

  • The issuer company can only use 25% of the proceedings for unidentified acquisitions. For identified acquisitions, it is capped at 35%.

  • The shareholders with more than 20% of the stake in the company before the IPO issue will only be able to sell half of their shares in OFS. Those investors with less than 20% of the stake in the company can only sell 10% of the shares in OFS.

  • The lock-in period for anchor investors has been increased to 90 days from 30 days w.e.f 1-Apr-2022.

  • The credit rating agencies are to monitor how the funds will be used by the issuer

  • From 1-Apr-2022, for book-built issues, two-thirds of the portion available for Non-Institutional Investors will be reserved for those applying for more than ₹10 lakh of shares, while the remainder will be for those bidding for shares worth ₹2 lakh to ₹10 lakh.

The above reforms were introduced to protect the interests of retail investors after incidents of promoters along with persons acting in concert trying to put their interests ahead of those of the minority shareholders.

In the beginning of 2021, SEBI reduced the disclosure requirements and eased the IPO norms for companies which led to many homegrown startups making a listing debut in 2021. SEBI also agreed to shift from the concept of a promoter to ‘person in control’ or ‘controlling shareholders’.

Mutual Funds

  • SEBI introduced a labeling norm for dividend options of MF schemes which came into effect from April 2021. As per the new norm:

  1. Mutual fund schemes with dividend options are now called income distribution-cum-capital withdrawal schemes

  2. Dividend payout plans are called payout of income distribution-cum-capital withdrawal options

  3. Dividend transfer plan is now called transfer of income distribution-cum-capital withdrawal option

  • SEBI has made it mandatory that a part of the compensation of key employees of the AMCs be paid in the form of units of the scheme. Minimum of 20% of the salary/ bonus/ perks/ non-cash compensation (gross annual CTC) net of income tax and any statutory contributions like NPS and PF of the key employees is now to be paid in the form of units in the mutual fund schemes in which they have a role or an oversight.

  • SEBI issued guiding principles to bring uniformity in the benchmarks against which a scheme’s performance is measured. This will come into effect from 1-April-2022.

  1. The first-tier benchmark will be reflective of the category of the scheme

  2. The second-tier benchmark should be demonstrative of the investment style or strategy of the Fund Manager within the category.

  • SEBI has made it mandatory for trustees of a mutual fund to obtain the consent of a majority of unitholders for winding up a scheme. SEBI also approved a mandate for mutual funds to follow the Indian Accounting Standard from FY24 to bring stability and transparency.

  • SEBI approved to facilitate Co-investment by investors of Alternative Investment Funds (AIF) through portfolio management route.

  • Like Gold ETFs, ETFs based on silver were introduced in 2021.

2. Process Related

100 % Peak Margin

SEBI introduced a new set of guidelines for Collection & Reporting of Peak Margin (the highest margin requirement for a trade done during the day) in Dec 2020. It scheduled the 100% rollout of Peak Margin in the following 4 phases:

  • Phase 1 (From 1- Dec-2020 to 28-Feb-2021) – 25% of Peak Margin obligation

  • Phase 2 (From 1-Mar-2021 to 31-May-2021) – 50% of Peak Margin obligation

  • Phase 3 (From 1-Jun-2021 to 31-Aug-2021) – 75% of Peak Margin obligation

  • Phase 4 (1-Sep-2021 onwards) – 100% of Peak Margin obligation

With the successful implementation of Phase 4 of Peak Margin from Sep-2021, 100% of the total applicable margin is now required as peak margin to place orders.


SEBI directed National Securities Depository Ltd (NSDL) and Central Depository Services Ltd (CDSL) to ensure that six important KYC attributes are updated in the existing demat, and trading accounts by 31-Dec-2021 and made all six KYC attributes mandatory for new accounts opened on or after 1 August 2021.

The 6 KYC attributes are Name, Address, Permanent Account Number (PAN), valid mobile number, valid email ID, and income range.

T+1 Settlement Cycle

The landmark announcement of 2021 by SEBI was moving towards a shorter settlement cycle. SEBI permitted stock exchanges to switch to the T+1 settlement cycle from the present T+2 cycle. Click here to know more about the shorter settlement period.

Following SEBI’s announcement, Market Infrastructure Institutions (Stock Exchanges, Clearing Corporations, and Depositories) have decided to implement the T+1 settlement cycle in a phased manner from February 25, 2022 (Refer to the circular here).

  1. Unfair Trade Practices Related

To curb the menace of unfair trade practices in securities market, SEBI took some stringent actions of:

  • Slapping crores of fines on individuals and entities who were involved in insider trading

  • Banning 85 entities in a single day that were involved in manipulative trading from the securities market

  • Increasing the reward for insider trading informants to ₹10 crores from ₹1 crore

  1. Others

  • Nod for Social Stock Exchange

In 2021, SEBI approved the creation of the Social Stock Exchange to enable social enterprises to raise funds on a public platform

  • No advice on unregulated new age assets like crypto

SEBI barred registered investment advisors from offering any official advice on unregulated new-age asset classes like cryptocurrencies, non-fungible tokens (NFTs), digital gold, etc.

  • Accredited investors

SEBI approved to introduce a framework for accredited investors (a class of investors who may be considered well-informed or well-advised about investment products)

  • Delisting Norms

SEBI amended the delisting norms by

  1. Making it mandatory for a promoter or acquirer to disclose the intention to delist by making an initial public announcement

  2. Introducing and revising timelines for various activities involved in delisting

  3. Introduction of a committee of independent directors for recommendations, and the specification of an indicative delisting price not less than the floor price

  • Resident Indian Fund managers can be now FPI constituents

To facilitate investment in the Indian securities markets through the FPI route, SEBI permitted resident Indian fund managers to become constituents of FPIs that are registered as Alternative Investment Funds (AIFs) in International Financial Services Centres.

Not all the decisions and implementations done by SEBI may have a direct impact on you as an investor. But all the decisions are carefully taken by SEBI to safeguard your interests and prevent gaps in the market that may be misused for any personal gains. As we step into 2022, with SEBI in place as a regulator you can be assured of a fairer securities market.