Market regulator SEBI has proposed doubling the additional disclosure limits for foreign portfolio investors (FPIs). Currently, there is a rule to provide additional disclosure for such foreign portfolio investors whose equity assets under management (AUM) is more than Rs 25,000 crore.
In view of the increase in market volume, SEBI in its consultation paper released on January 10 has suggested increasing the AUM limit to Rs 50,000 crore. The circular issued in this regard states, ‘In view of the increase in market volumes, it is proposed to increase the limit for additional disclosure from Rs 25,000 crore to Rs 50,000 crore.’
The purpose of setting the size criteria was to prevent foreign portfolio investors (FPIs) from violating the guidelines of Press Note 3. There was particular concern about large foreign portfolio investors, as they have the ability to cause disruption in Indian markets. The press note was issued in 2020, the purpose of which was to control the money coming from border countries and it was made necessary to get approval from the government for direct and indirect investments coming from these countries.
The circular states, ‘The possibility of disrupting the functioning of the market will have to be assessed according to the size of the market. In this regard, a broad market parameter – turnover – can be used to estimate the market size. The data of average daily turnover (capital market segment of NSE) for FY 2022-23 and FY 2024-25 (till December 2024) shows an increase of 122%.