Madhabi Puri Buch, the chairperson of the SEBI, expressed concerns about the stretched valuations of smallcap and midcap stocks, popular among retail investors. She noted potential market froth and urged caution, emphasizing the risks associated with inflated valuations and the adverse impact on investors when bubbles burst.
The BSE Midcap and Smallcap indices declined, prompting regulatory actions by Sebi and AMFI to enhance disclosures for these funds, including valuations, volatility, and stress tests. Buch also highlighted signs of manipulation in the SME segment, and Sebi plans to introduce more risk-related disclosures for investor awareness.
Additionally, Sebi aims to allow optional T+0 trade settlement for equities by March 28, enabling same-day settlements, as opposed to the current T+1 basis.
SIP route is experiencing continued popularity among retail investors, with new SIP accounts in February surpassing closures by 2.3 times, reaching a 27-month high.
In February, 49.7 lakh SIP accounts were opened, while 21.3 lakh were closed, resulting in a net SIP addition of 28.4 lakh—almost double the one-year average addition. The net SIP addition has grown by 66% annually over the past five years.
SEBI is addressing concerns of manipulation in SMEs hitting the market by working on increased disclosures. Madhabi Puri Buch highlighted the susceptibility of SMEs to manipulation at both the IPO and trading levels due to their small issue size and free float.
Sebi Chairperson Madhabi Puri Buch emphasized the importance of instantaneous settlement in the regulated securities market to compete with cryptocurrencies, which offer instant liquidity and other conveniences.
Sebi is set to launch optional T+0 settlement in Indian equity markets on March 28, enabling same-day settlement. Despite criticism, Buch stated that Indian markets are ahead in faster trade settlement cycles compared to other jurisdictions.
To address concerns of market migration to crypto, Sebi is exploring tokenization and considering measures like introducing small and medium Real Estate Investment Trusts (REITs), reducing the minimum investment in mutual fund SIPs, and addressing fractional shares with the Ministry of Corporate Affairs.
SEBI has expanded the framework for qualified stock brokers (QSBs) by introducing three additional parameters for identification, namely brokers’ compliance score, proprietary trading volumes, and grievance redressal mechanism.
Brokers can now voluntarily opt to become QSBs, with current parameters including the number of active clients, total client assets, trading volumes, and margin obligations.