The Securities and Exchange Board of India (Sebi) is planning to introduce a new asset class which will fall between mutual funds and portfolio management services (PMS) and is meant for investors who have a high-risk appetite.

This was disclosed by Sebi chairperson Madhabi Puri Buch in the capital on Friday at the sidelines of a CII event.

Buch said there is a spectrum of asset classes for various investors, starting from mutual funds to PMS and alternative investment funds.

"We feel there is room for an additional asset class somewhere between mutual funds and PMS... Sebi is looking into a whole new asset class," she said without giving further details.

In October, mutual funds industry body Amfi said the idea of a new asset class was at a "very nascent stage".

The industry body had said discussions were held within the industry for an instrument that caters to investors who are looking for an investment product between mutual funds and PMS.

Buch said Sebi is ready to introduce same-day settlement of trades on the stock exchanges by March 2024.

"We are ready to introduce T+0 (T plus zero) settlement trade by the end of the current fiscal", she said at the event.

The regulator, which has reduced the settlement timelines to T+1 from T+2, is now looking to shorten it further.

It was earlier this year that the domestic capital markets had transitioned to T+1 settlement in which trades are settled on the next business day.

"It takes two things to make this happen. First is technology and second is co-creation. We are now moving to T+0 which will happen before the end of this financial year and one year from there we will have instantaneous settlement, which is optional. When we do this, risk in the system comes down," Buch added.

"The two reasons why we have been able to bring T+1 to the people are stellar technology — the technology and market stack in India are unparalleled and have been acknowledged as one of the best in the world. Second is the co-creation with the institution and creating a methodology of regulations with them," she said.

Meanwhile, inflow in equity MFs dropped 22 per cent month-on-month to Rs 15,536 crore in November, while small cap funds continue to see traction. This was much lower than the Rs 19,957 crore inflow seen in October.