SEBI Raises FPI Granular Disclosure Threshold to Rs 50,000 Crore
In a significant move to adapt to the evolving capital markets, the Securities and Exchange Board of India (SEBI) has approved an important modification to foreign portfolio investor (FPI) disclosure requirements. The market regulator has decided to increase the investment threshold for granular disclosures from Rs 25,000 crore to Rs 50,000 crore.
Understanding the Disclosure Requirement
Previously, FPIs with equity assets under management (AUM) exceeding Rs 25,000 crore were mandated to provide detailed information about their investors and stakeholders on a look-through basis. This new decision reflects the substantial growth in the Indian capital markets.
Market Growth Context
The decision comes in light of remarkable market developments. SEBI noted that cash equity market trading volumes have more than doubled between FY 2022-23 and the current FY 2024-25. This substantial increase prompted the regulatory body to recalibrate its disclosure thresholds.
Key Highlights of the New Regulation
- FPIs with over Rs 50,000 crore in equity AUM will now be required to make additional disclosures.
- The circular from August 24, 2023, remains largely unchanged, maintaining existing checks against potential market disruptions.
- All FPIs continue to be subject to Prevention of Money Laundering Act (PMLA) norms.
Regulatory Objectives
The size criteria for these disclosures were originally designed to prevent potential circumvention of regulatory stipulations, particularly Press Note 3. By implementing these guidelines, SEBI aims to maintain the orderly functioning of Indian securities markets and protect investor interests.
Implications for Foreign Portfolio Investors
While the threshold has been raised, the fundamental requirement remains consistent. Large FPIs must continue to provide transparent information about their ownership structures, economic interests, and control mechanisms. This approach helps maintain market integrity and provides regulators with comprehensive insights into foreign investment patterns.
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