SEBI reviews FPI compliance norms, plans consultation paper on global alignment

The Securities and Exchange Board of India (SEBI) is set to review compliance requirements for foreign portfolio investors (FPIs) and consult on aligning Indian norms with global standards, while maintaining investor protection and market integrity. SEBI Chairman Tuhin Kanta Pandey highlighted that some compliance requirements in India are more burdensome than those in other major jurisdictions.

He emphasized the need to review these requirements and issue a consultation paper to seek input on global alignment. The move reflects India's efforts to enhance its capital markets and attract increased domestic and international capital to meet growing financing needs. SEBI has already taken steps to facilitate foreign investor participation, such as streamlining market access and simplifying procedures.

However, the issue of self-listing on exchanges remains open, with Pandey stating that it could be revisited with appropriate safeguards. The regulator also did not rule out the revival of closed regional exchanges like the Calcutta Stock Exchange, provided they demonstrate commercial viability. Pandey stressed that exchanges must show their ability to attract sufficient trading volumes to sustain operations, considering the technological advancements and risks associated with artificial intelligence.

He underlined the importance of domestic savings and international participation in expanding capital availability and expertise, as India's market capitalization-to-GDP ratio has increased from 69% in FY16 to around 130% currently. The next phase of market development will focus on increasing financing opportunities for businesses, boosting investor participation, and ensuring fair, resilient markets worthy of public trust.