Sebi chief says P-notes reforms likely on SIT recommendations

The board of directors of market regulator Securities Exchange Board of India (Sebi) will meet today to discuss changes to the participatory notes (P-notes) framework. Ahead of the board meet Sebi chief U K Sinha gave sneak peek into what the market regulator might do today.

Speaking on the sidelines of the Asia Pacific Real Estate Association Summit, Sinha said, “SIT made some suggestion for us to make out some improvement in P-notes. We had our series of discussion and decision will be taken soon on this. Suggestion is there to get more information on P notes besides KYC norms which is already there in our present regulation.”

Sinha added that overseas investors have been consulted on the changes that are been muted and they seems to be on board with it.

Sources said, regulator today in board meet may ask P-note issuer to mandate Know Your Customer checks for subscribers as for onshore investors. In addition, Sebi may put restrictions on transfer of P-note among subscribers. It might also ask issuers to conduct a semi-annual check on the P-note holders and positions. The regulator wants strong systems in place to identify the end-beneficiaries. Information on the latter is needed to ensure an institutional investor doesn’t breach the 10 per cent investment cap in a single company.

These apart, market regulator may also ease the norms of Infrastructure Investment Trust (InvITs). “We have received four proposal on Invits , two of those proposal has been cleared by us. The rest two has certain shortcomings related to minor procedural things,” said Sinha. At present our regulation on Invits has some difficulties especially on special purpose vehicle (SPV) part which we are considering, he added.

Securities and Exchange Board of India ( SEBI )