SEBI’s First Board Meeting Under New Chairman: Key Regulatory Measures on the Agenda

The Securities and Exchange Board of India (SEBI) is poised to introduce a series of regulatory reforms at its first board meeting under newly-appointed Chairman Tuhin Kanta Pandey on March 24. These measures are expected to enhance the governance and transparency of market infrastructure institutions (MIIs), boost investor protection, and refine trading mechanisms.

The anticipated decisions include ensuring the independence of clearing corporations, introducing a close auction session in the cash market, and revising the appointment framework for public interest directors (PIDs) at MIIs. Additionally, SEBI is expected to extend the advance fee collection period for research analysts, introduce a SIM-binding mechanism to curb unauthorised transactions, and tighten disclosure norms for real estate investment trusts (REITs) and infrastructure investment trusts (InvITs), according to reports. 

Ensuring Independence of Clearing Corporations

One of the key agenda items is the autonomy of clearing corporations (CCs). The dilution of stock exchanges’ shareholding in their respective clearing houses—the National Stock Exchange (NSE) and BSE—is expected to move forward. While maintaining some degree of shareholding is considered necessary, SEBI is likely to implement minimum and maximum shareholding thresholds for exchanges in CCs to prevent monopolistic control, according to a news report.

A structured divestment plan for exchange shareholding in CCs is also under consideration. As per a news report, “The shareholding of exchanges in CCs is expected to be divested through a scheme in the form of ‘offer for sale’, similar to the corporatisation and demutualisation scheme.”

Changes in the PID Appointment Process

SEBI is also set to introduce a revised framework for the appointment and reappointment of PIDs at MIIs. Of the two proposed models, the regulator is likely to retain the existing process, which does not require shareholder approval. Additionally, a high-level appointment committee is unlikely to be formed, as it could add unnecessary complexity to the selection process, a news report stated.

The new process may involve a two-stage shortlisting mechanism, where MIIs submit two candidates, with SEBI evaluating them before requiring further documentation. Furthermore, existing PIDs will not have an automatic right to reappointment, reinforcing the autonomy of MIIs’ governing boards, according to a news report.

Reforms in Angel Funds and Alternative Investment Funds (AIFs)

The SEBI board is expected to ratify changes in the angel fund framework, restricting participation to accredited investors while easing regulations for alternative investment funds (AIFs). Additionally, the definition of qualified institutional buyers (QIBs) may be broadened to include accredited investors and the 200-investor cap for private placement offers could be removed.

New Security Measures for Trading and Demat Accounts

To enhance security in trading and demat accounts, SEBI is expected to introduce a SIM-binding mechanism to prevent unauthorised transactions. This measure aims to curb fraudulent activities and protect investors by ensuring that transactions are linked to verified mobile numbers.

Tightening ESG Rating and Sustainability Standards

Another key area under review is the framework for ESG Rating Providers (ERPs). SEBI may provide additional clarity on the withdrawal of ratings and require detailed disclosure of rating rationales. The Business Responsibility and Sustainability Reporting (BRSR) framework is also likely to be reviewed to align with globally recognised environmental, social, and governance (ESG) norms.

Other Anticipated Reforms

• Cooling-off period for key managerial personnel (KMPs) and directors: SEBI may introduce a cooling-off period before KMPs and directors of an MII can join a competing MII, following consultation with industry stakeholders.
• Changes in risk monitoring for equity derivatives: Although discussions on revised gross and net position limits for intraday and end-of-day trading have been ongoing, a consensus has not been reached. These proposals are unlikely to be presented in this meeting.
• Budget review for FY 2025-26: The board will also review SEBI’s expenditure and budget allocation for the upcoming financial year.

Conclusion

SEBI’s first board meeting under Chairman Tuhin Kanta Pandey is expected to bring significant regulatory changes aimed at improving transparency, security, and efficiency in the financial markets. While major reforms in clearing corporations, PID appointments, and investor security are expected, certain risk monitoring proposals may remain under deliberation. Investors and market participants will closely watch the outcomes of this meeting, as they could have a lasting impact on India’s capital markets.

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