Sebi's Focus on Investor Information Quality & Capital Formation

New Delhi, Aug 9 (PTI) Sebi is looking to set up two new institutions -- Performance Validation Agency and Data Benchmarking Institution -- to improve the quality of information provided to investors in the securities market.

The first institution, Performance Validation Agency, will validate the claims of performance related to services offered by Investment Advisors (IAs), Research Analysts (RAs) and Algo providers.

Data Benchmarking Institution will provide a central repository of standardised and comparable data related to various asset classes.

Both institutions are aimed at improving the quality of information provided to investors in the securities market, the Securities and Exchange Board of India (Sebi) said in its annual report for 2023-24.

Additionally, the regulator has proposed to create a closed ecosystem for fee collection by registered IAs and RAs through a separate mechanism to help investors ensure that their payments are reaching only registered IAs and RAs and help them identify, isolate and avoid unregistered entities, who would be unable to access this closed ecosystem.

For the year 2024-25, Sebi said that one of its focus areas is capital formation for real estate and infrastructure sectors, and regulations may need to be customised to facilitate the growth of infrastructure and real estate in our country.

Towards this end, the regulator has set up an advisory committee for real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) to understand needs of the market and its stakeholders.

Noting that every segment of infrastructure may need a somewhat different solution and a homogenous single set of regulations may not work in sectors as large as infrastructure and real estate, Sebi said regulations may need to be customised to the products that industry needs and such an approach can facilitate the growth of infrastructure and real estate in our country.

Investment in Infrastructure is also of great importance to the urban local bodies as municipal bonds are steadily gaining popularity for fundraising for investment in urban infrastructure.

"If businesses following the models of democratisation are supported by thoughtful and innovative policies, a day will come when our REITs, InvITs and Municipal Bond markets could be many times their current size," Sebi noted.

Also, the regulator has planned a number of initiatives to be undertaken in 2024-25, Sebi would be undertaking a review of voluntary delisting norms, including reviewing the reverse book-building process and exploring other alternatives to determine exit price to make the framework of voluntary delisting of companies more flexible while balancing the interests of all stakeholders in the process.

A simplified and risk-based framework for trades by stock brokers and stock exchanges has been proposed to be framed for trades carried out by clients in the equity and equity derivatives segment.