New regulations for Mutual Fund Investment Institutions (MII) governance and a comprehensive review of Mutual Fund activities on the horizon, according to SEBI.
The Securities and Exchange Board of India (SEBI) is set to discuss a range of potential changes in mutual fund regulations and market infrastructure governance at its board meeting on September 12, 2025.
One of the key topics on the agenda is the rationalization of mutual fund categories and permissible activities for asset managers. SEBI is also considering flexibilities for large value funds for accredited investors.
Related party transactions and relaxations in minimum public shareholding rules for large IPOs are also potential topics for discussion. The board may ratify client code modifications from market makers to the Asset Management Companies (AMC) for associated Exchange-Traded Fund (ETF) schemes without penalties.
The proposed changes also involve modifications to client codes for institutional and non-institutional trades. OTR allocation for all institutional categories will be monitored for changes in beneficial ownership.
In terms of market infrastructure governance, SEBI is expected to approve a long-pending proposal of strengthening the governance at market infrastructure institutions (MIIs) through mandatory appointment of two executive directors (EDs) of appropriate stature and independence as heads of the first two verticals, who will also sit on the governing board.
The changes include tighter rules on the roles and outside directorships of managing directors at MIIs. The MD of an MII may be allowed to serve as a non-executive director for a Section 8 or government company not involved in commercial activity, including educational institutions and universities.
The board may approve the tightening of roles and responsibilities for managing directors (MD), executive directors (EDs), chief information security, and chief technology officers, as per the National Critical Information Infrastructure Protection Centre (NCIIPC).
The implementation of the first ED appointment is expected to take place within six months of the circular, and the second ED appointment may take nine months. However, no information about who will be appointed as Executive Director at the leading market infrastructure institutions or when the first Executive Director will be appointed was provided.
For Foreign Portfolio Investors (FPIs), modification of client codes or obligation transfer request (OTR) allocation may be allowed for different PANs within a FPI group/family managed by the same investment manager. Exchanges may allow multiple client codes linked to the same PAN for certain client categories, formulated by the industry standards forum. The waiver for a stock broker to modify a client code may be increased from once per quarter to accommodate genuine errors.
Past performance declaration norms for research analysts are another topic on the agenda. No response was received from an email sent to SEBI regarding this matter.
The article was published on September 4, 2025. The search results do not provide any information about the timeline for the first and second ED appointments, or who will be appointed as EDs at the leading market infrastructure institutions.
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