Revamping Custodian Regulations: SEBI's Modernization Initiative

The Securities and Exchange Board of India (SEBI) is proposing updates to custodian regulations, emphasizing control changes, business continuity, and enhanced reporting. With custodial assets increasing significantly, SEBI aims to modernize rules to align with technological advancements and market needs. Public comments on these proposals are invited until November 28.

The Securities and Exchange Board of India (SEBI) is on a mission to overhaul the custodian regulations, initially established in 1996, as it looks to align with modern technological advancements and the phenomenal growth in custodial assets from Rs 2.70 lakh crore in 2002 to Rs 278.50 lakh crore in 2024.

According to a consultation paper floated on Wednesday, SEBI is considering a standardised framework for control changes, updated codes of conduct, and new standards for business continuity and contingency planning. Current custodians provide services crucial for the safekeeping of assets and compliance with regulations for foreign portfolio investors, mutual funds, and other entities.

The regulator has created a working group focusing on key areas: code of conduct, business continuity, reporting requirements, control changes, and net worth standards. Recommendations include requiring SEBI's prior approval for control changes and submitting online applications through SEBI's portal. Public feedback on the proposals is solicited until November 28.

(With inputs from agencies.)