Sebi Introduces Faster Rights Issues and New Investment Options: Big Changes Ahead for Investors

The Securities and Exchange Board of India (Sebi) has approved major changes to make rights issues faster and introduced new investment options at a recent board meeting. This meeting, lasting seven and a half hours, was the first after some conflict-of-interest claims surfaced against Sebi’s chairperson, Madhabi Puri Buch. The official statement from Sebi didn’t mention these allegations.

Key Highlights:

New Asset Class Introduced: Sebi will now allow asset management companies to offer unique investment strategies, such as long-short equity and inverse exchange-traded funds (ETFs), also known as “bear” ETFs. These ETFs give opposite returns to the assets they are based on. To invest, you’ll need a minimum of ₹10 lakh.

Faster Rights Issues: Companies can now complete rights issues in just 23 working days, down from the current 317 days, allowing quicker fundraising. Promoters can also pass their rights to select investors.

New Rules for Insider Trading: Sebi has expanded the definition of who is considered a “connected person” with access to confidential information. This now includes partners, family members like spouses, parents, in-laws, siblings, and people living with the connected person. This aims to tighten insider trading regulations.

More Stocks for Same-Day Settlement: Sebi will gradually increase the number of stocks eligible for same-day (T+0) trading settlement, expanding from the top 25 to the top 500 companies based on market value.

These moves by Sebi aim to speed up processes, offer new investment choices, and tighten insider trading rules to better protect investors.