SEBI Proposes Raising FPI Disclosure Threshold to Rs. 50,000 Crore Amid Surging Market Liquidity

The market regulator, the Securities and Exchange Board of India, has suggested increasing the size thresholds for compulsory disclosures by foreign portfolio investors (FPIs) from Rs. 25,000 crore to Rs. 50,000 crore. This is being proposed due to increased market liquidity.

As per the data mentioned by the regulator in its consultation paper, during the financial year 2022-23, the average daily turnover in the capital market segment was over Rs 53,000 crore. By the financial year 2024-25 (up to December 31, 2024), this figure had surged to over Rs. 1.1 lakh crore. 

This shows an increase of 122%, showing that the market's trading volume has more than doubled in less than two years, reflecting heightened activity and participation in the securities market.

The ‘potential to disrupt the functioning of the market’ has to be evaluated relative to the size of the market. In this regard, a broad market parameter such as turnover can be used as a factor to assess the size of the market, the regulator said in the paper. 

Currently, FPIs holding more than 50% of their Indian equity AUM in a single corporate or with equity assets under management (AUM) exceeding Rs. 25,000 crore in the Indian market need to disclose granular details of all their stakeholders on a "look-through" basis.

This was done by the regulator to prevent investors from bypassing regulations such as Press Note 3, which restricts investments from countries that share a land border with India, as well as to safeguard the market from disruptions caused by large investors. 

The regulator has asked for public comments to be submitted on these proposals by Jan 31.