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Board meeting: Sebi tweak AIF valuations, investment advisor norms

Changes to MF overseas investment framework, ESG disclosures also on the cards at Thursday's board meet


Khushboo Tiwari Mumbai

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Valuations of alternative investment funds, relaxing rules on disclosures related to ESG (environment, social and governance), and norms on investment advisors and finfluencers will be on the table of the Securities and Exchange Board of India (Sebi) for approval at its board meeting scheduled for June 27, according to sources.

Apart from these, there will be about 20 other items.

The regulator may approve an application of the International Private Equity and Venture Capital Valuation Guidelines (IPEV) for unlisted securities held by alternative investment funds (AIFs).

Last year, Sebi had mandated valuing AIF assets. The guidelines are needed because the current norms for valuation, applicable also to mutual funds, mostly address listed entities, leading to gaps in assessing unlisted ones.

A few other decisions regarding the private placement memorandum of AIFs may materialise on Thursday.

A source said the proposal to revise the eligibility conditions for single stocks for derivatives required more consultation and might not be approved at the meeting.

However, if approved, the upward revision in eligibility criteria may open the door for over 75 new stocks in futures and options (F&O) and lead to exits of over two dozen from the list.

Sebi may also clear an earlier proposal to curb misinformation through finfluencers. Last year, it had proposed restricting the association of its regulated entities like mutual funds and brokers with finfluencers. 

With norms in place for administrative bodies to monitor research analysts and investment advisors, the regulator may streamline regulations on fee collection and monitoring for them.

Ease of compliance for ESG-related disclosures by listed companies and their value chain partners is also likely to be part of the meeting’s agenda. 

However, the Asia Securities Industry & Financial Markets Association (Asifma), a global association of financial institutions, had spoken against several relief measures proposed by Sebi. 

On Sebi’s suggestion to change “assurance” to “assessment” in Business Reporting and Sustainability Reporting (BRSR), Asifma has recommended against it. 

“Independent assurance can help to improve the quality and accuracy of companies’ reporting and should be encouraged. Maintaining an assurance requirement would inspire confidence in the quality of India’s BRSR disclosures from international investors,” said Asifma in a submission to the Indian markets regulator. 

Instead, it has suggested a phased approach. Further, on making such ESG disclosures “voluntary” instead of “comply or explain basis”, Asifma said backtracking could have a negative impact on market confidence and competitiveness.

The decision to allow domestic mutual funds to invest in certain overseas funds, exchange-traded funds, and unit trusts may be taken in the same meeting. Such permission will allow mutual funds to have an exposure to the MSCI Emerging Markets Index and JP Morgan’s Emerging Markets Opportunities Fund. 

Norms on ease of doing business for merchant bankers may be approved.

On the anvil

> Valuation norms for unlisted assets in AIF schemes

> Investment advisor related decisions, norms to address association with finfluencers

> Revision of eligibility criteria for single stocks in derivative segment

> Relaxation in ESG-related disclosures for value-chain partners of listed companies

> Permission to domestic MFs to invest in certain overseas funds with India exposure

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First Published: Jun 24 2024 | 9:03 PM IST

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