India's markets regulator Sebi approved major changes to conflict-of-interest guidelines for its top officials and eased rules for foreign portfolio investors. The measures seek to standardize trading restrictions and enhance ease of doing business.
The Securities and Exchange Board of India (Sebi) approved a comprehensive overhaul of its conflict-of-interest guidelines during Monday's board meeting. The changes follow recommendations from a high-level committee (HLC) formed in March 2025 to review the framework for the chairperson and whole-time members (WTMs). This came amid past scrutiny from US firm Hindenburg Research, which accused former Sebi chairperson Madhabi Puri Buch of conflicts linked to Adani Group firms. Sebi employees, WTMs, and the chairperson are now barred from trading in equity and equity-related instruments, limited to mutual fund holdings. New investments in pooled vehicles are allowed only if managed by regulated intermediaries, Sebi Chairman Tuhin Kanta Pandey stated. New appointees must liquidate or freeze such investments, including in unlisted companies. Restrictions extend to family members, except for unlisted securities curbs. Top officials fall under the 'insider' definition for investments. Officials including the chair, WTMs, executive directors, and chief general managers must publicly disclose immovable assets, akin to Union government civil servants. A digital system will track conflict disclosures and recusals. For ease of business, FPIs can now net-settle outright cash market transactions (purchases or sales, not both), reducing funding costs, especially during index rebalances. The board also amended 'fit and proper' criteria for market intermediaries. In Mumbai, following HDFC Bank's non-executive chairman Atanu Chakraborty's resignation citing ethics concerns, Pandey emphasized independent directors' duties. 'Independent directors are expected to act responsibly,' he said. 'No one should make insinuations without proper evidence and recordings,' he added, noting systems exist to formally record concerns.
