2024: CHANGES THAT MATTER
Outlook Money|January 2025
The year 2024 has been a game-changer for the Indian regulatory landscape, with the Securities and Exchange Board of India (Sebi), Insurance Regulatory and Development Authority of India (Irdai), the Reserve Bank of India (RBI), the Pension Fund Regulatory Development Authority (PFRDA) and the Income Tax Department proposing key changes that will benefit investors, policyholders, pensioners, taxpayers and consumers alike. We give you a lowdown on five key changes proposed by each of these regulators
2024: CHANGES THAT MATTER

Put Option For Bond Investors: Sebi unveiled a new voluntary “put option” for investors to sell bonds back to the issuers on specific dates at up to 100 basis point (bps) discount. Effective from November 1, 2024, this aims to enhance the liquidity of corporate bonds and boost the confidence of retail investors and growth-stage issuers. This allows bond investors to sell their bonds back to the issuer at specific dates with a slight discount and enhances investor flexibility and liquidity in the bond market. By mitigating interest rate risk, it encourages greater participation and reduces uncertainty for investors.

MFs Under Insider Trading Regulations: Sebi has brought mutual fund (MF) houses under the Prohibition of Insider Trading Regulations, 2015. This change, effective November 1, 2024, mandates MFs, trustees, employees, and directors to comply with insider trading regulations, such as disclosing MF holdings quarterly, and barring them from selling MFs if they have privileged information. Bringing MFs under insider trading regulations strengthens investor protection. It prohibits fund managers and other related personnel from utilising confidential information for personal gains or to benefit specific investors. This move enhances transparency and builds trust among investors, ensuring fair and equitable treatment for all.

Small Cap Funds Stress Test: Sebi has mandated stress tests for small-cap funds to assess their ability to handle large redemptions during market downturns. Recent tests show improved liquidity, with small-cap funds now requiring an average of 13.7 days to liquidate 50 per cent of their portfolios. This is a positive sign, but investors should still carefully evaluate liquidity profiles of individual funds and consider their risk tolerance before investing. Among the largest 10 small-cap funds, five saw improvements in their liquidity positions in March 2024.

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