SEBI Board Meeting: Focus on F&O Trades and MF Lite

The Securities and Exchange Board of India (SEBI) is set to convene a board meeting on Monday, with key discussions centered around futures and options (F&O) trading and mutual funds.

Reports indicate that the markets regulator may implement stricter regulations on F&O trading in light of substantial losses incurred by individual traders. A recent SEBI study highlighted that individual traders in the equity F&O segment suffered aggregate losses exceeding ₹1.8 lakh crore from FY22 to FY24, with over 90% continuing to face significant losses, yet more than 75% of those traders remain active in F&O trading.

Additionally, the board is expected to discuss a new asset class aimed at bridging the gap between mutual funds and portfolio management services, providing investors with greater diversification in investment management.

SEBI Chairperson Madhabi Puri Buch recently mentioned at the Association of Mutual Funds in India (AMFI) event that the introduction of “MF lite” regulations is on the horizon, following comprehensive consultations. She emphasized the need for relaxed distribution requirements for these funds.

Previously, SEBI proposed MF lite regulations to ease compliance burdens and encourage the establishment of mutual funds focused solely on passive schemes.

Another significant topic on the agenda is the enhancement of insider trading regulations. SEBI plans to redefine “connected person” by substituting “immediate relative” with “relative,” aligning the definition with the Income Tax Act.

Additional discussions are anticipated regarding the easing of norms for research analysts, certification for investment advisors, fast-tracking rights issues, and regulations for merchant bankers.