Sebi to release FII compliance consultation paper within weeks, says chairman Tuhin Kanta Pandey
Sebi is likely to release a consultation paper on foreign investor compliance requirements within weeks, chairman Tuhin Kanta Pandey said. The proposed document will explore aligning Indian norms with global standards amid heavy FII outflows. The regulator is also planning a capacity-building network to strengthen independent directors’ effectiveness.
The Securities and Exchange Board of India (Sebi) is set to release a consultation paper on foreign institutional investors (FIIs) within the next few weeks, according to chairman Tuhin Kanta Pandey. The document will seek input on harmonizing Indian FII regulations with global standards amid a significant outflow of foreign capital causing persistent declines in stock indices.
In the first half of the year, FIIs withdrew a net $31.4 billion from local equities, seeking maximum returns in safe-haven assets due to rising U.S. Treasury yields and the dollar's strength against other currencies amid ongoing geopolitical uncertainties.
Pandey mentioned that Sebi is reviewing requirements that are more burdensome in India compared to other major markets. The regulator is also addressing the issue of levied security transactions tax (STT) and the reintroduced long-term capital gains (LTCG) tax at a rate of 12.5%, which was increased last year. Additionally, Sebi is examining regulatory processes to reduce unnecessary compliance burdens and improve operational efficiency, aiming for a more proportionate and risk-based regulatory framework while preserving high standards of governance and market integrity.
Speaking at a Bharat Chamber of Commerce platform, Pandey also indicated that the regulator is planning a capacity-building network involving institutions, professional bodies, academia, and chambers of commerce to enhance the skills and effectiveness of independent directors in corporate governance. The network will balance independence and regulatory oversight.
Pandey addressed the potential revival of the Calcutta Stock Exchange, noting that the regional bourse, suspended since April 2013, needs to meet regulatory standards, settle outstanding dues, and upgrade trading infrastructure, including adopting an online screen-based trading system. While questioned about the need for additional exchanges to deepen the market, Pandey affirmed that there are no regulations hindering the establishment of new stock exchanges.
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