India’s markets regulator, Sebi, has approved comprehensive reforms to expand participation, simplify regulations, and attract foreign investment across commodities, real estate trusts, and portfolio management, signalling a significant shift in the country’s securities framework.
India’s markets regulator has approved a wide-ranging package of reforms designed to broaden participation, loosen some of the tighter rules around portfolio management and make the securities framework easier to navigate, according to the Securities and Exchange Board of India. The measures, cleared at a board meeting on Thursday, touch everything from commodity trading and mutual funds to real estate trusts, settlement rules and research compliance.
One of the biggest changes is a new route for foreign portfolio investors to take part in physically settled, non-agricultural commodity derivatives, provided they unwind positions at least three days before expiry and before the tender period begins. Sebi also moved to open a door for real estate investment trusts and infrastructure investment trusts to issue depository receipts in approved overseas jurisdictions, a step meant to attract foreign capital into those vehicles.
The board also broadened the definition of accredited investors. Individuals with securities market assets of ₹5 crore and corporates with such assets of ₹20 crore will now qualify, alongside the existing income and net-worth tests. In a parallel move, Sebi approved a common advertising code for specified intermediaries, allowing celebrity use for brand or entity promotion while still barring endorsements of specific financial products or services.
The most extensive changes were reserved for portfolio managers. Sebi approved the Securities and Exchange Board of India (Portfolio Managers) Regulations, 2026, replacing the current 2020 framework, and let portfolio managers invest in IPOs, primary market debt issues and a wider set of overseas securities. Under the revised rules, they may also place up to 10% of client assets under management into investment-grade, unlisted non-convertible debt securities, with client consent. The new framework additionally allows investment in overseas listed equities and debt, REITs, overseas mutual funds, exchange-traded funds, index funds and foreign government securities, subject to applicable regulations.
Sebi further introduced a route for portfolio managers to buy direct plans of Indian mutual fund schemes, including ETFs, index funds and specialised investment funds, with a minimum ticket size of ₹25 lakh. It also created the concept of independent fund managers, who can operate client portfolios in association with registered portfolio managers, although the registered firm will remain responsible for their actions. To cut compliance burdens, the regulator relaxed educational requirements for principal officers and exempted smaller portfolio managers, with assets under management below ₹100 crore, from the dealing-room rule if they maintain proper audit trails and internal controls.
The board said the revised portfolio management rules have been reduced from 70 pages to 33, with the word count cut by about 42%. Industry reaction was broadly positive. Sandeep Jethwani, co-founder of Dezerv, described the mutual fund investing route for portfolio managers as a potentially transformative step for Indian investors, speaking to the publication that carried the report.
Sebi also overhauled its settlement framework. The new rules introduce a revised formula for calculating settlement amounts and a faster route for cases involving sums of up to ₹10 lakh. The regulator said the new structure will separately account for disgorgement of wrongful gains, loss avoided or loss caused to investors, avoiding double counting in settlement terms. Makarand M Joshi, founder partner at MMJC & Associates, said Sebi data showed settlement applications peaked at 703 in FY24-25 before easing to 439 in FY25-26, with 170 applications disposed of, arguing that the trend underlines the need for a more efficient mechanism.
The board also cleared a fourth Settlement Scheme, 2026, for entities facing proceedings linked to non-genuine trades in illiquid BSE stock options between 1 April 2014 and 30 September 2015. Separately, it changed REIT and InvIT rules, including shifting voting thresholds on certain matters to 75% of votes cast rather than 75% of all outstanding units, while also refining exit-offer rules when a sponsor changes and clarifying how dissenting unitholders are treated.
Elsewhere, Sebi eased compliance for research analysts and research entities by relaxing the requirement to keep recordings of communications with institutional investor clients. It also widened the vault manager framework to cover bullion tied to other Sebi-specified products, including gold and silver ETFs and bullion derivatives, while raising the minimum net worth requirement for vault managers from ₹50 crore to ₹75 crore. Sebi said the package is intended to deepen market participation, improve ease of doing business, widen investment opportunities and strengthen oversight across the securities market.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
