SEBI's New Framework: Major Reforms in Securitisation Market

SEBI has introduced major reforms in the securitisation market, including investment thresholds, participation rules, risk management, liquidity facilities, eligibility requirements, and track record requirements.

Investment Thresholds and Participation Rules

SEBI (Securities and Exchange Board of India) minimum investment "ticket size" set at Rs 1 crore
Private placements capped at 200 invest ors
Public offers must remain open for 3-10 days
Mandatory dematerialisation of all securitised debt instruments
Targeted at high-net-worth and institutional investors
Public offer advertising guidelines aligned with non-convertible securities
All transactions to be conducted electronically
Enhanced transparency and reduced fraud risk through demat form

Risk Management and Asset Quality

Originators must retain 10% of securitised pool
Reduced to 5% for assets with 24-month maturity
Minimum holding period requirement for underlying assets
Optional clean-up call feature for up to 10% asset repurchase
Mandatory liquidity facilities for cash flow management
Single-asset securitisation not permitted
Diversification requirements for asset pools
Third-party liquidity support options available

Eligibility and Track Record Requirements

Originators must have 3 years operational experience
Trade receivables require two cycles of default-free payments

Eligible assets limited to:

- Listed debt securities
- Accepted trade receivables
- Rental incomes
- Equipment leases
Strict qualification criteria for originators and obligors
Focus on established market participants
Enhanced due diligence requirements

New Mutual Fund Regulations (Effective Nov 2024)

Insider trading regulations extended to mutual funds
Restrictions on senior AMC employees' trading
Enhanced scope for "connected persons" including:
- Board members
- Sponsors
- Trustees
- Auditors
- Legal advisors
- Bankers
- Consultants
Mandatory institutional mechanisms for AMCs
Whistle-blower protection policy implementation
UPI requirement for investments up to ₹5 lakh
Reduced minimum subscription period from three to two working days
Streamlined public comment period for draft offers

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