At the Securities and Exchange Board of India (Sebi) board meeting on June 27, valuations of alternative investment funds, easing regulations on ESG (environment, social, and governance) disclosures, and standards for investment advisors and influencers will be discussed and approved.
There will be roughly twenty other products in addition to these.
For unlisted shares owned by alternative investment funds (AIFs), the regulator may accept an application under the International Private Equity and Venture Capital Valuation Guidelines (IPEV).
Sebi had required the valuing of AIF assets last year. The recommendations are necessary since the existing valuation standards, which also apply to mutual funds, primarily address listed firms, leaving gaps in the evaluation of unlisted ones.
On Thursday, a few further choices pertaining to the AIFs’ private placement memorandum may be made.
According to a source, the proposal to update the requirements for single stocks’ eligibility for derivatives needed additional discussion and might not pass the meeting.
If authorised, the revised eligibility requirements could, however, result in the removal of over two dozen stocks from the list and the addition of over 75 additional stocks in futures and options (F&O).
Sebi might also approve a previous plan to stop the spread of false information via influencers. It had suggested limiting last year the way its regulated entities—such as brokers and mutual funds—could associate with finfluencers.
The regulator may simplify rules on fee collection and monitoring for research analysts and investment advisors if standards are established for administrative entities to keep an eye on them.
The agenda item for the meeting is probably going to include ease of compliance for listed firms and their value chain partners’ ESG-related disclosures.
However, a number of the relief measures that Sebi had suggested were opposed by the Asia Securities Industry & Financial Markets network (Asifma), a global network of financial firms.
Asifma has advised against Sebi’s proposal to replace “assurance” with “assessment” in Business Reporting and Sustainability Reporting (BRSR).
“Independent assurance should be promoted since it can enhance the calibre and precision of businesses’ reporting. In a report to the Indian markets regulator, Asifma stated that “maintaining an assurance requirement would inspire confidence in the quality of India’s BRSR disclosures from international investors.”
Rather, it has recommended a step-by-step strategy. Furthermore, Asifma stated that going back on the decision to make such ESG disclosures “voluntary” rather than on a “comply or explain basis” could harm market confidence and competitiveness.
At the same meeting, it may be decided to permit domestic mutual funds to invest in certain foreign funds, exchange-traded funds, and unit trusts. Mutual funds will be able to invest in JP Morgan’s Emerging Markets Opportunities Fund and the MSCI Emerging Markets Index with this licence.
It may be decided to accept standards for merchant bankers’ ease of doing business.
Upon the anvil
> AIF schemes’ unlisted asset valuation standards
Decisions pertaining to investment advisors and standards for handling affiliation with influences
> Modification of prerequisites for individual stocks in the derivatives segment
> Reduction of ESG-related disclosures for listed businesses’ value-chain partners
> Permission for local mutual funds to invest in some foreign funds that have a presence in India