sebi-unveils-major-regulatory-changes-for-2025

In 2025, the Securities and Exchange Board of India (Sebi) is set to introduce a range of changes aimed at reshaping the landscape of financial markets in the country.

 

These new regulations will impact sectors such as mutual funds, derivatives, and financial influencers, and will likely drive significant transformation for investors, businesses, and regulators alike.

 

While some initiatives have already been approved, others are still under review, hinting that the year ahead will be a pivotal one for India's financial sector.

 

One of the most anticipated changes is the introduction of the Mutual Fund Lite regulations, which will take effect on March 16, 2025. This initiative aims to simplify the regulatory framework for passively managed funds, easing the burden on asset management companies.

 

Under these new rules, asset management firms will be required to maintain a minimum net worth of ₹35 crore. Additionally, they will need to demonstrate a proven track record, including being profitable for at least three of the previous five years and maintaining a positive net worth throughout this period.

 

Another significant development is the launch of the Specialized Investment Fund (SIF) Regulations on April 1, 2025. This new asset class is designed to bridge the gap between mutual funds and portfolio management services, providing high-net-worth individuals (HNIs) and accredited investors with access to more advanced investment strategies.

 

The SIF will require a minimum investment of ₹10 lakh, making it a more exclusive offering.

 

Sebi is also making moves in the derivatives market. A key change will be the removal of the calendar spread benefit on expiry day, effective from February 1, 2025.

 

Alongside this, other measures will be implemented, such as the introduction of intraday monitoring of position limits from April 1 and the requirement for upfront collection of option premiums from buyers starting February 1.

 

In the realm of financial influencers, Sebi is tightening its regulations. As part of efforts to combat unregulated financial advice, Sebi has clarified that no regulated entity can associate with unregistered content creators offering securities advice.

 

By January 2025, these entities must terminate any existing contracts with unregistered financial advisers. This move reflects the growing concern over the rise of "finfluencers" who influence investment decisions without proper regulation or oversight.

 

Experts are also predicting a series of challenges for Sebi and the broader market in 2025. Among the key concerns is the expected tightening of norms for initial public offerings (IPOs) from small and medium enterprises (SMEs).

 

As Sebi seeks to enhance retail investor protection and improve market transparency, new measures will likely be introduced to ensure that investors are better safeguarded. This could include stricter reporting and disclosure requirements, as well as more rigorous checks on market participants.

 

Additionally, experts foresee increased regulation in areas such as algorithmic trading, with Sebi introducing stricter compliance standards to prevent misuse. There is also expected to be a heightened focus on cybersecurity risks, given the increasing frequency of cyberattacks targeting financial institutions.

 

As market infrastructure becomes more reliant on AI tools, Sebi is likely to introduce regulations to ensure greater accountability for these technologies.

 

The introduction of new policies may not stop there. Sebi is currently reviewing several proposals related to sustainable finance, aiming to align India’s financial markets with global sustainability goals.

 

These include frameworks for social bonds, sustainability-linked bonds, and sustainable securitised debt instruments. Issuers would be required to appoint independent reviewers to ensure transparency and credibility in these offerings.

 

Sebi is also exploring changes in the digital space, proposing a framework for the recognition of Specified Digital Platforms (SDPs). This would help curb illegal activities, such as the provision of unregistered financial advice, and enhance investor protection in the digital world.

 

In addition, the regulator is looking at reforms in the angel fund sector, including reducing the minimum investment for startups from ₹25 lakh to ₹10 lakh and shortening the lock-in period. These changes are expected to make it easier for investors to engage with early-stage businesses.

 

In the clearing corporations space, Sebi is considering changes that would allow stock exchanges to hold a majority stake of 51% in clearing corporations. This move aims to reduce conflicts of interest and improve market efficiency.

 

While all of these changes are being implemented, there is an increasing need for more effective coordination between regulators. According to some industry experts, overlapping regulations between different financial authorities have created a complex compliance environment for businesses.

 

This has added to the burden for banks, non-banking financial companies (NBFCs), and insurance companies, and there is a call for a more interconnected regulatory framework to ease this challenge.

 

On a global scale, the challenges of cross-border operations are also becoming more prominent. With the tightening of data security regulations, such as the EU’s General Data Protection Regulation (GDPR), financial institutions will face increased complexity in compliance.

 

As cyberattacks become more frequent and global data privacy laws become stricter, these challenges will likely add to the regulatory burden on Indian financial entities operating internationally.