Sebi board to consider reintroducing open-market window for buybacks on Friday

Markets regulator Sebi’s board is set to meet on Friday to deliberate on a wide-ranging agenda, including a proposal to reintroduce open-market buybacks, faster clearance for AIF schemes and relaxed intraday borrowing rules for mutual funds, people familiar with the matter said.

These measures are aimed at improving market efficiency.

A key proposal before the board is to reintroduce open-market share buybacks through stock exchanges, along with shortening execution timelines.

The regulator has proposed that open market buybacks through stock exchanges be completed within 66 working days from the date of opening of the offer, instead of the earlier framework that allowed a duration of up to six months.

Also, Sebi proposed retaining the existing requirement that companies should utilise at least 40 per cent of the earmarked buyback amount during the first half of the offer period.

This will be the sixth board meeting chaired by Sebi Chairman Tuhin Kanta Pandey since he assumed office on March 1, 2025.

Apart from the reintroduction of open-market buybacks, the Sebi board will clear a proposal regarding a new green-channel mechanism – GARUDA – to speed up the launch of schemes by alternative investment funds (AIFs), allowing them to begin fundraising within 10 working days of filing their placement memorandums, compared with the current 30-day wait.

GARUDA, or Green-Channel: AIF Rollout Upon Document Acknowledgement, aims to streamline the processing of placement memorandums (PPMs) filed with Sebi and further ease fundraising by AIFs.

In addition, the board is expected to consider a proposal allowing mutual funds to use intraday borrowing lines for a wider range of cash management needs, including trade settlements, forex obligations and derivative margin payments beyond just meeting redemption payouts.

The proposal seeks to address operational challenges faced by asset management companies (AMCs) due to timing mismatches between outflows and receivables within a scheme.

At present, intraday borrowing serves as an important cash flow management tool for mutual fund schemes, helping fund managers meet payout obligations and settlement requirements efficiently.

Under the proposal, AMCs are expected to be permitted to avail intraday borrowings not only for redemption or unitholder payouts but also for purposes such as pay-in obligations for trades, forex settlements, mark-to-market payments on derivative positions and repayment of existing borrowings.