SEBI plans overhaul of listing and disclosure rules: Pandey

The Securities and Exchange Board of India (SEBI) is planning sweeping changes in the Listing Obligations and Disclosure Requirements (LODR) regulations to simplify compliance, improve transparency and strengthen investor protection, chairman Tuhin Kanta Pandey said on Thursday.

Speaking at the Financial Express Modern BFSI Summit in Mumbai, Pandey said the regulator is also considering third-party monitoring of funds raised through initial public offerings (IPOs) to ensure that companies use the proceeds for the purposes specified in their offer documents.

“As a first step, we have proposed stronger monitoring of issue proceeds with greater transparency and accountability. Further proposals will follow, focusing on ease of doing business and simplified compliance without compromising investor protection,” he said.

On concerns over muted listing gains in some recent IPOs and the risks faced by retail investors, Pandey said Sebi had strengthened disclosure requirements, including the introduction of abridged prospectuses, to help investors better assess companies’ business models and valuations. However, disclosures could only facilitate informed investment decisions, not guarantee listing gains.

He cautioned against the disproportionate emphasis on listing-day returns and pointed out that these are influenced by prevailing market conditions. Investors must distinguish between trading and investing and assess their risk appetite before entering the market.

Citing record systematic investment plan (SIP) inflows in recent months, Pandey said a growing number of investors were recognising the benefits of long-term investing and compounding across market cycles.

On the futures and options (F&O) segment, he said the regulator was seeking to strike a balance between making investors aware of the risks involved and ensuring that excessive regulation did not stifle market development.

Addressing the sustained selling by foreign portfolio investors (FPIs) in India’s secondary markets, Pandey described the outflows as cyclical, driven partly by relatively lower post-tax dollar returns in India compared with other markets.

He said Sebi was engaging with foreign investors to address their key concerns and ease regulatory friction. While overseas investors were reallocating capital to markets offering better recent returns, they continued to have confidence in India’s macroeconomic fundamentals and long-term growth prospects, he added.

Pandey also identified deepening the cash and corporate bond markets as key priorities for Sebi. The regulator is reviewing several other frameworks, including the stock lending and borrowing mechanism and the SME IPO regulations, as part of its broader efforts to improve market efficiency and ease compliance.