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Sebi plans to simplify access for foreign investors, says Tuhin Kanta Pande
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Business Standard
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Sebi plans to simplify access for foreign investors, says Tuhin Kanta Pande

Sebi Chairman Tuhin Kanta Pande announced on Monday that the regulatory body is working to simplify the digital registration process for residents outside India, expand the participation of Foreign Portfolio Investors (FPIs) in non-agricultural commodity derivatives, and introduce depository receipts for Real Estate Investment Trusts (REITs) and publicly traded Infrastructure Investment Trusts (InvITs).

Pande noted that the approach towards foreign investors aims to reduce hurdles throughout the investment journey. He emphasized that the registration process is becoming faster, more digital, and proportional to the level of risk. The SWAGAT-FI framework reflects this approach for low-risk, reliable investors, and as of June 1, 2026, about 205 FPIs are already using this system.

He added that the regulator's future strategy will focus on easing access, deepening markets, and enhancing resilience. Pande mentioned that appointed depository participants are already employing digital workflows and Application Programming Interface (API)-based integration to shorten FPI registration times, and the regulator aims for such technological solutions to be adopted more widely, turning 'ease of access' into a systemic feature rather than an exception.

Regarding market structure, Pande stated that Sebi is consulting on the net settlement calculation for money market mutual fund schemes. Following the establishment of the Closed Auction Session, the regulator will now address issues related to derivative settlement pricing on expiry days, for which a consultation document has already been released.

Furthermore, the regulator will continue to expand participation in the money market, improve securities lending and borrowing, and support hedging and arbitrage to strengthen the price discovery process.

On corporate bonds, Pande stated that work is underway on a market-making system covering liquidity, infrastructure, and repo access, alongside consultations on fixed-income channel partners to expand distribution through regulated online bond platforms, and it is proposed to introduce a 'Credit Risk-o-Meter' to simplify credit risk understanding for investors.

He also reported that the framework program for accredited investors is under review, and portfolio management proposals include permission to invest in foreign securities and the creation of a mechanism to support global fund management activities from India.

In conclusion, Pande summarized: 'Our goal is clear: to reduce unnecessary friction, deepen markets, and strengthen safeguards where risks are real.'

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Sebi Chairman reports liquidity issues in global markets following the introduction of closed auction
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business-standard.com

Sebi Chairman reports liquidity issues in global markets following the introduction of closed auction

The Chairman of the Securities and Exchange Board of India (Sebi), Tuhin Kanta Pandey, stated on Thursday that reduced liquidity was observed during the initial stages of implementing the Closed Auction Session (CAS) across various global jurisdictions. This mechanism was adopted by India starting August 3rd.

Speaking at the Global Fintech Fest (GFF), the Sebi chairman emphasized that although the regulator will soon publish a consultative document with proposals for changes within CAS, the CAS mechanism itself remains in effect. Pandey noted that many participants highly appreciated the introduction of CAS, including the MSCI rebalancing, and technically everything proceeded successfully.

However, he pointed to a market segment experiencing difficulties because the settlement price was entirely tied to a specific method. The market regulator announced last week the preparation of a consultative document regarding changes in the methodology for determining settlement prices for derivatives contracts, based on feedback received. These proposals are expected this week.

The Chairman added that CAS will continue to operate, and the only issue is liquidity. He reported that many market participants discussed the launch in different jurisdictions, including the US, Japan, and Hong Kong, and noted that initially, wherever CAS was introduced, liquidity was always a problem, but it improves over time. He questioned whether they should just wait or if there are temporary solutions for this problem.

As an example, he mentioned that Hong Kong launched a closed auction in 2008 but withdrew it in 2009 due to end-of-day price fluctuations; however, it was later reinstated in 2016 with the introduction of price limits and other modifications. Some brokerage firms anticipate stricter auction price ranges, expansion, or the imposition of a trading session, or the calculation of index derivatives based on volume-weighted average price.

Addressing the panel at GFF, Pandey elaborated on the regulator's use of Artificial Intelligence (AI) tools for supervision and assurance. He explained that AI can help regulators identify risks earlier, but it must complement, not replace, regulatory judgment. With AI, monitoring can shift from periodic to proactive. Supervision can become more remote than direct and occur almost in real-time rather than periodically.

The Chairman also presented Sebi's initiatives and tools, such as Sudarsan, R(AI)DAR, and the Cybersecurity Audit Compliance Portal (C-SAC), which help the regulator monitor social media and intermediaries' advertisements, as well as analyze cybersecurity measures. He concluded that supervision must be competent, empowered, and accountable, and safeguards must surround the model. He also noted that agent AI requires strict boundaries on its actions, as AI has the potential to create its own concentration risk, and general models and providers' cloud infrastructure can become single points of failure. Predictive supervision should not create new systemic vulnerabilities when detecting old ones, and capability is a control that needs to be developed among supervisors.

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