SEBI's Endeavor: Exploring a New Asset Class for High-Risk Investors

The Securities and Exchange Board of India (SEBI) is contemplating the introduction of a novel asset class tailored for investors with a penchant for high-risk ventures. This prospective category, positioned between Portfolio Management Services (PMS) and mutual funds, aims to cater to such risk-tolerant investors.

Discussions on the New Asset Class

SEBI Chairperson Madhabi Puri Buch, speaking at the Confederation of Indian Industry's Global Economic Policy Forum, disclosed that discussions are underway with industry stakeholders. Buch emphasized the need for this intermediary asset class, contemplating its structure, benefits, and risk mitigation strategies. This proposed category is anticipated to impose a higher minimum investment threshold while offering relaxed norms to potentially yield elevated returns.

SEBI is actively working on expediting trade settlements, aiming for a same-day settlement mechanism by March 2024. Additionally, discussions are in progress for an optional system to enable instantaneous settlements. Upon implementation, India would align with China as one of the few countries settling trades within a single day. This would signify a significant departure from the current 'T+1' settlement cycle.

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Facilitating Investments in REITs and InvITs

SEBI is engaging with various investors, including foreign entities like pension funds, to streamline investments in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). The endeavor seeks to ease regulations and make these avenues more accessible, as they hold potential for inflation-proof income.

SEBI recently greenlit a framework to support smaller and medium-sized REITs, recognizing their potential in the real estate landscape. InvITs, functioning akin to mutual funds for infrastructure investments, are also part of this concerted effort.

SEBI's concerted efforts towards introducing a new asset class, expediting trade settlements, and facilitating investments in REITs and InvITs underscore its commitment to augmenting investment avenues and streamlining financial mechanisms for diverse investor profiles.