It's Ease Of Doing Investments

Sebi plans to introduce regulatory-light regime with the debut of Accredited Investors in the Indian securities markets. The regulator faces a host of challenges to counter risks of investor frauds

- Yagnesh Kansara

The hefty text on any investment memorandum runs through hundreds of pages, often frustrating the reader, and creating confusion. Even investment czar Warren Buffett once slammed the system, saying it was humanly impossible for an investor to go through 700 or 800 pages of regulatory compliance before taking an informed decision to invest in the securities market.

“It’s a perennial problem for an investor,” says Sandeep Shah, Senior Partner at NA Shah Associates, “There are too many compliance protocols for the investor to comprehend. And, eventually, it leads to utter confusion.”

The need for a change in the age-old system has finally pushed the Indian securities markets to take a big leap towards ease of doing investment. And, the markets regulator Securities and Exchange Board of India (Sebi) has geared up to introduce the concept of Accredited Investor (AI).

The Accredited Investors will be there alongside their existing peers like retail investors, high net-worth individuals (HNI) and institutional investors, who are classified based on their investment exposure and risk appetite.

An Accredited Investor represents a class of people who have an understanding of various financial products and the risks and returns associated with them and, therefore, they are able to take informed decisions regarding their investments. Although the concept of AI is about to debut in India, this well-established class of investors is active in various developed jurisdictions and are recognised by many securities and financial market regulators around the globe.