Specialised investment fund, the new asset class notified by the Securities and Exchange Board of India, is expected to attract investors who have the ability to take higher risks yet may not want to go the whole hog by investing in unregulated instruments. FE gets into the nitty-gritties of this new option
l What prompted Sebi to introduce this new asset class?
WITH THE STOCK markets doing rather well for over four years, investors are flocking to make a quick buck.
The rise in the number of discount brokerage firms, along with technological advancements like digital know-your-customer (KYC), Unified Payments Interface, and others, has helped expand the stock market ecosystem. Currently, there are over 182 million demat accounts, and it has been rising at a healthy clip of 4 million accounts a month in FY25. The new investors, mostly youngsters, have a higher penchant for risk-taking and are quite willing to put money in initial public offerings (IPOs), futures and options (F&O), SME IPOs, mid- and small-cap stocks, and even crypto-currencies. In such circumstances, the market regulator has been forced to take several steps to ensure that investor enthusiasm in these high-risk investment routes gets tempered. Specialised investment fund (SIF) is one of the many moves it has made to wean away investors from high-risk to moderate-risk instruments.
l What are the other measures it has taken?
FROM OCTOBER, EXCHANGES are paying uniform transaction fees to all brokers. Earlier, brokers bringing in higher volumes were charged a lower transaction fee. This encouraged, especially discount brokerages, to attract clients by charging them a lesser fee. Now, with the incentive gone, many brokerages have started charging clients. Sebi also brought in strict guidelines for F&O and SME IPO markets — both were seeing significant froth. In F&O, the contract size has been increased from Rs 5-10 lakh to Rs 15 lakh, and the number of expiries has been reduced to one per exchange, with an additional 2% charge as an extreme loss margin, among other things. For SME IPOs, a host of guidelines were issued last week. Companies wishing to list at SME exchanges will need to have an operating profit of Rs 1 crore in a minimum of two out of the three previous years, and the offer for sale cannot exceed 20% of the issue size, among other things.
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