SEBI Unveils Regulatory Measures For Online Real Estate Platforms And Derivatives Trading, Details Here

In a move to enhance investor protection and bring more transparency to the financial markets, India's Securities and Exchange Board (SEBI) announced significant regulatory measures during its quarterly board meeting on Saturday.

One of the notable decisions involves the regulation of online platforms offering fractional ownership of real estate assets. SEBI declared that these platforms will now be registered under a framework designed for small and medium real estate investment trusts. This move is aimed at ensuring that investors have a secure and regulated environment when participating in fractional ownership of real estate, a trend that has gained popularity in recent times.

In another key development, SEBI revealed that fresh investments by alternative investment funds will be stored electronically starting from September 2024. This digitization of investment records aims to streamline processes and enhance efficiency in the financial system.

Madhabi Puri Buch, the Chairperson of SEBI, expressed concern about investors losing money in equity derivatives trading. She emphasized that it is the regulator's responsibility to caution investors about the associated risks. Despite the rise in equity derivatives trading, Buch clarified that it does not pose any systemic concerns for the market.

The surge in derivatives trading in what has historically been a conservative market environment can be attributed to changes in options contracts by stock exchanges. These changes facilitated quicker and more cost-effective bets, coupled with the proliferation of online retail trading platforms. Buch acknowledged the trend but highlighted that SEBI has urged an exchange to seek feedback from brokers and investors before considering an extension of market hours. Notably, the National Stock Exchange had previously proposed evening trading sessions to SEBI.

Addressing concerns about SEBI's plan to allow same-day settlement of equity market trades to assist retail investors, Buch dismissed worries as "exaggerated." This move is intended to benefit retail investors by providing quicker settlement options, potentially reducing market risks.

In addition to these measures, SEBI approved rules for index providers. The regulator stated that certain indices frequently used by market participants will now fall under SEBI regulations. This move aims to bring more clarity and oversight to the functioning of these indices, ensuring fair practices and investor protection.

The regulatory changes announced by SEBI signify a proactive approach to adapting to the evolving landscape of financial markets. By addressing concerns related to real estate investments and derivatives trading, SEBI aims to foster a more secure and transparent environment for investors in India.

*Inputs from Reuters*