All SEBI employees, including WTMs and the chairman, will be restricted from trading in equity and equity-related instruments, with only mutual fund holdings permitted.
The Securities and Exchange Board of India (SEBI) on Monday approved a host of measures at its board meeting, including overhauling the conflict-of-interest guidelines for the chairman and whole-time members as recommended by the high-level committee (HLC) set up by the regulator back in March 2025. It also approved measures promoting ease of doing business for market participants, including allowing foreign portfolio investors (FPIs) to settle cash market transactions on a net basis.
The board approved the HLC’s recommendations to create uniformity in investments and trading for both employees and higher officials such as the chairman and Whole-Time Members (WTM). The reforms come after the regulator fell under scrutiny when US-based short selling and research firm Hindenburg Research had accused then SEBI Chairperson Madhabi Puri Buch of conflict of interest, linking her and her immediate family to undisclosed stakes in a few Adani Group firms. SEBI had then set up the HLC to review the framework regarding the conflict-of-interest.
All SEBI employees, including WTMs and the chairman, will be restricted from trading in equity and equity-related instruments, with only mutual fund holdings permitted. New investments in any pooled financial vehicle will be only permitted if the scheme is managed by a regulated market intermediary, Sebi Chairman Tuhin Kanta Pandey said after the board meeting. Thus, people joining the regulator as the chairman or WTMs are now either required to liquidate or freeze their investments in equity-related instruments and commercial ventures, including in unlisted companies. These restrictions are also applicable to the family members of SEBI employees, except for the curbs imposed on investments in unlisted securities. As with employees, these higher-level officials have also been brought under the definition of “insider” in case of investments.
The chair, WTMs, executive directors and chief general managers will have to publicly disclose details of immovable assets, in-line with norms applicable for Union government civil servants. It will also bring a digital system and formal recusal to record disclosure of conflicted relationships and track decisions regarding recusals.
FPI norms eased
The SEBI board approved a proposal to allow FPIs to net-off cash market transactions, provided they are outright. This means FPIs can now net-off either a purchase or sale transactions, but not both.
“Since non-outright transactions will continue to be confirmed and settled on a gross basis, concerns relating to potential market influence arising from large FPI positions or speculative trading activity is allayed,” the regulator noted.
This is expected to reduce the cost of funds for FPIs, particularly on days when the indices are rebalanced (stocks added or omitted), which could lead to monetary loss. Currently, these investors close such cash market transactions on a gross basis, which means they require more finances to complete them.
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The board also approved amending the ‘fit and proper’ criteria for acting as market intermediaries. Full report on
Independent directors must act responsibly, says Tuhin Kanta Pandey
Mumbai: In the wake of HDFC Bank’s non-executive Chairman Atanu Chakraborty’s sudden resignation last week, SEBI Chair Tuhin Kanta Pandey on Monday highlighted the critical responsibility of independent directors to uphold ethical standards and refrain from making “insinuations”.
Chakraborty had stepped down citing concerns about ethics and values, prompting Pandey to stress the importance of accountability and the duties that independent directors are expected to uphold.
“Independent directors are expected to act responsibly,” he said. Pandey told reporters that independent directors are expected to safeguard the interests of minority shareholders and act “responsibly.”
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“No one should make insinuations without proper evidence and recordings,” he said during the customary post-board meeting interaction.
A system exists to handle the concerns of independent directors, ensuring that such concerns are raised with the board and formally recorded in the minutes, he said quoting the statutes. —ENS
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