The Securities and Exchange Board of India announced on Friday comprehensive simplifications to the accreditation process for investors participating in alternative investment funds, marking a significant step toward streamlining regulatory procedures in the AIF sector.

Streamlined Agreement Execution Process

Under the revised framework, investment managers now have enhanced flexibility in managing investor onboarding. They are permitted to execute contribution agreements and complete related formalities based on their own assessment of an investor's eligibility, eliminating the previous requirement to wait for formal accreditation certificates.

However, important safeguards remain in place to ensure regulatory compliance. The investor's commitment will not be counted toward the scheme's corpus until the accreditation certificate is formally issued, and AIFs can only accept funds after the investor becomes officially accredited.

Relaxed Net Worth Documentation Requirements

SEBI has significantly simplified the documentation process for accreditation based on net worth criteria. The regulator has abolished the mandatory requirement for investors to submit detailed break-ups of their net worth, reducing administrative burden and processing time.

Under the new guidelines, chartered accountants have greater flexibility in their certification process. They are no longer required to state the actual net worth figure, provided their certificate confirms that the investor meets the prescribed threshold requirements.

Compliance and Implementation Framework

To ensure proper oversight of these changes, SEBI has established clear compliance requirements for AIF stakeholders:

• Trustees must capture compliance with revised norms in Compliance Test Reports
• Sponsors are required to ensure adherence to new accreditation processes
• Investment managers must maintain proper documentation of eligibility assessments

These revised norms took effect immediately upon announcement, allowing market participants to benefit from the streamlined processes without delay.

Regulatory Context and Future Direction

The latest simplifications align with SEBI's broader initiative to enhance the AIF ecosystem's efficiency. In August, SEBI Whole Time Member Ananth Narayan G outlined the regulator's proposal for a new accredited investors-only AIF regime featuring reduced compliance requirements. This framework aims to enable sophisticated investors to support higher-risk ventures more efficiently while maintaining appropriate investor protection standards.

The immediate implementation of these changes demonstrates SEBI's commitment to responsive regulation that addresses market needs while preserving essential safeguards for investor protection and market integrity.

The Securities and Exchange Board of India (Sebi) has announced comprehensive proposals to overhaul stock exchange regulations, targeting the elimination of redundancies, retirement of outdated provisions, and improvement of operational efficiency for exchanges and market participants. This sweeping reform initiative represents the second phase of Sebi's ease-of-doing-business measures following the regulator's consultation paper released in October.

Enhanced Net-Worth Requirements for Margin Trading

Sebi has proposed significant changes to the financial requirements for stockbrokers offering margin trading facilities (MTF). The key modifications include:

The existing ₹3 crore threshold, introduced in 2004 as a safeguard to ensure only institutional participants offered margin trading, has remained unchanged since its last review in 2022. Under the new framework, exchanges would gain authority to revise net-worth requirements independently without seeking prior regulatory approval.

Streamlined Compliance and Reporting Timelines

The regulator has proposed revised timelines for net-worth certificate submissions by brokers offering MTF services. The new framework establishes different deadlines based on reporting periods:

• Half-year ended September 30: 45-day submission timeline
• Half-year ended March 31: 60-day submission timeline

These changes align with Sebi's August 2025 decision to synchronize net-worth certificate submission timelines with financial result declaration requirements under listing regulations. To maintain consistency, the regulator has also proposed extending auditor certificate submission timelines to match the revised net-worth schedules.

Regulatory Modernization and Consolidation

Sebi's reform package addresses several outdated regulatory provisions that have become obsolete over time. The regulator plans to remove market-making provisions issued in 2000, which are no longer utilized by exchanges. Modern exchanges now prefer liquidity enhancement schemes (LES), which offer greater flexibility and operate on principle-based frameworks.

The consultation paper proposes merging commodity derivatives provisions with equity cash and equity derivatives under a unified framework. This consolidation would encompass market making and volume enhancement schemes, with simplified approval, monitoring, and review processes. A streamlined half-yearly board review would replace the current system of multiple reviews and approvals.

Operational Enhancements for Market Participants

The proposed reforms include several measures designed to ease operational requirements for exchanges and market participants:

• Simplified client code modification procedures
• Increased error waiver frequency from quarterly to monthly
• Elimination of quarterly waiver reporting to Sebi
• Replacement of special inspections with regular exchange monitoring
• Removal of end-of-day surveillance report requirements for pre-open call auction alerts

SME Platform Clarifications and Commodity Market Incentives

Sebi has addressed regulatory clarity issues for companies listed on the SME platform following corporate restructuring events such as demergers. The regulator proposes incorporating earlier clarifications that market making requirements would apply unless the demerged company has already fulfilled these obligations.

For commodity derivatives, Sebi has proposed incentivizing farmer and farmer producer organization (FPO) participation in options trading by utilizing option premiums paid by these entities. This initiative aims to enhance agricultural sector engagement in derivative markets.

Policy Context and Implementation Timeline

These comprehensive reforms align with Finance Minister Nirmala Sitharaman's Union Budget directive for FY24, which emphasized simplifying compliance and reducing costs for financial sector participants through consultative processes. The current proposals represent the second installment in Sebi's series of ease-of-doing-business measures, with the ultimate goal of issuing a single consolidated circular covering all trading-related provisions.

The draft consultation paper remains open for stakeholder comments until January 30, 2026, allowing market participants to provide feedback on the proposed regulatory changes before final implementation.