Get Ready for Higher Returns: Sebi Plans New Asset Class for High Risk Takers
Introduction
The Securities and Exchange Board of India (Sebi), the capital markets regulator, is considering the introduction of a new asset class to cater to high-risk investors. This asset class would bridge the gap between portfolio management services (PMS) and mutual funds, offering unique benefits to individuals seeking higher returns. Sebi chairperson Madhabi Puri Buch discussed the development of this asset class during the Confederation of Indian Industry’s Global Economic Policy Forum.
Exploring the Need for a New Asset Class
Sebi recognizes the need for an asset class that offers a balance between PMS and mutual funds. Buch highlighted ongoing discussions with industry experts and stakeholders to shape this new class effectively. The regulator aims to define the characteristics and risk management strategies associated with this asset class.
Enhanced Investment Opportunities and Risk Mitigation
The proposed asset class is expected to have higher minimum investment requirements and more relaxed norms to generate attractive returns. This will open doors to potentially lucrative investment opportunities for individuals with a high-risk appetite.
Same-Day Settlement Roadmap and Instant Settlement
Sebi is actively working towards implementing same-day settlement of trades by March 2024. Additionally, the regulator plans to introduce an optional parallel system for instant settlement, known as T+0. This advancement will revolutionize the settlement process in India’s capital markets, enabling trades to be settled on the same day.
Aligning with International Standards
India’s move towards same-day settlement will position the country as a pioneer, following in the footsteps of China. This short settlement cycle of just one day will put India on par with major global economies that already operate within a two-day settlement period.
Simplifying Investments in REITs and InvITs
Sebi is actively engaged with investors, including foreign investors such as pension funds, to make investments in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) more accessible. Buch emphasized the benefits of these investment vehicles, as they provide retail investors with income that is resistant to inflation. The government also sees potential in attracting more funding through REITs and InvITs, prompting Sebi to collaborate with investors to understand their specific regulatory needs.
Framework for Small and Medium REITs
In a recent development, Sebi approved a framework to facilitate the establishment of small and medium-sized REITs. These REITs, which own, operate, or finance income-generating real estate, present additional investment opportunities for individuals looking to diversify their portfolios.
InvITs: Direct Investment in Infrastructure
InvITs, similar to mutual funds, enable investors to directly invest in the infrastructure sector. This investment instrument offers individuals the chance to contribute to infrastructure development while potentially generating attractive returns.
In conclusion, Sebi’s endeavor to introduce a new asset class demonstrates its commitment to providing investment opportunities that cater to high-risk investors. The regulator’s roadmap for same-day settlement and plans for simplifying investments in REITs and InvITs highlight its proactive approach in aligning with global standards and fostering the growth of India’s capital markets.
Disclaimer:
The material in this article was compiled using the most recent Acts, Rules, Circulars, Notifications, Provisions, Press Releases, and material applicable at the time. The completeness and correctness of the material ensured with due diligence. It is required of users of this material to consult the relevant, applicable legislation. The data given may change without prior notice and does not constitute professional advice. As a result, Estabizz Fintech disclaims all liability for the results of using such material.
