The Securities and Exchange Board of India (SEBI) has announced new rules for Asset Management Companies (AMCs). Starting November 1, AMCs will have to publicly share the holdings of key individuals, trustees, and their close relatives every three months. This move aims to enhance transparency and accountability within the asset management sector.
SEBI has instructed regulated entities and their agents to cut ties with individuals providing investment advice or recommendations without being registered with the regulator. They are also prohibited from associating with anyone who claims returns or performance without SEBI’s approval. A circular released on October 22 outlines that all regulated entities and their agents must end any contracts with such individuals within three months.
On June 27, SEBI’s Board approved restrictions on these associations, leading to amendments in SEBI regulations that were announced on August 26, 2024. The new regulations state that anyone regulated by SEBI, including stock exchanges and clearing corporations, cannot associate with anyone who offers advice or recommendations about securities unless that person is registered or allowed by SEBI. They also cannot make any claims about returns or performance related to securities unless permitted by SEBI.
In the latest circular, SEBI emphasized that regulated entities and their agents must terminate any existing contracts with individuals involved in unapproved advisory activities within three months of the circular’s issue date. They must ensure that their associates do not engage in any unapproved activities.
Additionally, SEBI Whole Time Member Ashwani Bhatia expressed concerns over the high volume of futures and options (F&O) trading in India, which is the largest in the world. The rise of retail investors participating in high-risk derivatives trading is alarming. There are also concerns about retail investors in IPOs, especially in the small and medium enterprises (SME) sector. SEBI is preparing a discussion paper on SME IPOs that will be released soon. New investors are advised to stay away from trading and F&O activities.
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