All eyes will be on the SEBI Board when it meets on Monday as this is the first meeting after Hindenburg Research’s allegations against Chairperson Madhabi Puri Buch.

While insiders say that the Board is likely to take stock of the allegations, other issues that are likely to be addressed are proposed measures to restrict retail participation in the Futures and Options (F&O) segment, regulations for a ‘mutual fund lite’ aimed at passively managed funds, introduction of a new asset class bridging Portfolio Management Services (PMS) and mutual funds, and extension of the definition of ‘connected persons’ under insider trading norms to include certain relatives.

In August, Hindenburg Research alleged that the market regulator was unwilling to act on its January 2023 Adani report because SEBI chairperson Madhabi Puri Buch and her husband Dhaval Buch had investments in offshore funds that had links with the Adani group. Though Madhabi and Dhaval have vehemently denied these allegations, the SEBI board has been silent on the matter so far.

Important decisions

While it is not clear if the Board will take up the matter, Monday’s meeting is important from the market’s point of view because decisions on some important issues are expected to be taken. The board may discuss the introduction of a new asset class with a minimum ticket size of ₹10 lakh. The threshold will deter retail investors from investing in the product, while attracting investors with investible funds of ₹10-50 lakh, who are currently being drawn to unregistered portfolio management service providers.

SEBI may revise shareholding norms to allow more flexibility in the governance structure of passive mutual funds. This includes potential adjustments to the minimum net worth requirements for AMCs and reducing the lock-in period for sponsors’ shareholding, to attract serious players to the market.