SEBI Advisory committee on Hybrid securities

June 23, 2022

The Securities and Exchange Board of India (SEBI) has set up an advisory committee on hybrid securities, to make recommendations for the growth of hybrid securities.

About Advisory committee on hybrid securities

The committee will also recommend on measures focusing on attracting domestic & global capital and ease of issuance.
It is a 20-member committee, chaired by K V Kamath. K V Kamath is the Chairperson of National Bank for Financing Infrastructure and Development.
The committee also comprises of top-level officials of infrastructure investment trusts (InvITs), finance & legal experts of SEBI and officials of real estate investment trusts (REITs).

Task assigned to Committee

Committee will advise SEBI on issues related to regulation and development of primary & secondary markets of Hybrid securities in India.
It will identify use case scenarios of hybrid securities, in light of infrastructure financing needs of Indian economy.
It will make recommendations for developing instruments, in order to meet the needs of infrastructure sector.
It will further make recommendations on infrastructure financing by means of capital markets.
Panel will be responsible for making suggestions for facilitating greater retail participation in hybrid securities.
It will ensure protection of interest of investors.

Research Advisory Committee

SEBI has also reconstituted its research advisory committee. It is responsible for promotion, development and maintenance of databases which are relevant for research of capital market.

REITs and InvITs

REITs and InvITs are hybrid securities. They are relatively new investment instruments in Indian market, but are popular in global markets. REIT comprises of portfolio of commercial real assets. Major portion of the REIT asset is already leased out. InvITs comprises of a portfolio of infrastructure assets, like power transmission and highways.

What are Hybrid securities?

Hybrid securities are a broad group of securities, consisting of characteristics of two broader groups of securities namely debt and equity. Such securities pay a predictable rate of return or dividend (either fixed or floating), until a specific date.

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