Regulator proposes to cut trading lot size of privately placed InvITs

Markets regulator SEBI on Thursday proposed to drastically reduce the trading lot size of privately placed infrastructure investment trusts (InvITs) to ₹25 lakh in a bid to boost investors' participation and increase liquidity of such investment vehicles.

The current trading lot for secondary market trading for privately placed InvITs is set at ₹1 crore. Further, if the InvIT invests at least 80 per cent of its asset value in completed and revenue-generating assets, then the trading lot is ₹2 crore.

In its consultation paper, SEBI has proposed "to reduce the trading lot size for the purpose of trading units of privately placed InvITs on designated stock exchanges from ₹1 crore/ ₹2 crore to ₹25 lakh".

The proposal will help in increasing the liquidity of privately placed InvIT units by allowing a broader base of investors to participate in the market and promote diversification of investment portfolios, enabling investors to better manage risk. Additionally, the regulator has proposed several measures to reduce the compliance burden and facilitate ease of doing business InvITs and real estate investment trusts (REITs).

The Securities and Exchange Board of India (SEBI) has sought comments from the public till May 30 on the proposals.

Under the proposal, the regulator has suggested fixing the time for undertaking distributions to unitholders by the REIT and InvIT to five working days from the date of declaration. The move is expected to bring efficiency to the distribution process and will aid in making funds available to investors within a relatively shorter period of time.