SEBI Chair Hints at Key Market Reforms Including FPI Netting and Closing Auctions
SEBI Chairman Tuhin Kanta Pandey announced major market reforms at Samvad 2026, including an upcoming consultation paper on FPI netting positions and advanced-stage closing auction session proposals. With FPIs holding $900 billion in Indian markets and corporate bonds at ₹56 lakh crore, SEBI is streamlining registration processes and working with RBI on bond market improvements.
*this image is generated using AI for illustrative purposes only.
The Securities and Exchange Board of India (SEBI) is preparing to introduce significant market reforms, with Chairman Tuhin Kanta Pandey announcing multiple initiatives at the regulator's annual conference, Samvad 2026. The developments signal major changes ahead for Indian capital markets, particularly benefiting foreign investors and improving market infrastructure.
Major Reform Announcements
SEBI is set to release a consultation paper that could make it easier for foreign portfolio investors (FPIs) to net their positions. "I think the consultation paper will be out very soon, maybe it is out today," Pandey said on the sidelines of the conference. Netting allows investors to offset their buy and sell positions against each other, requiring settlement of only the final difference instead of every single trade.
The Chairman also provided updates on the long-awaited closing auction session introduction. He confirmed that the proposal is at an advanced stage and could be announced shortly. This brief window at the end of trading days will match orders through an auction to discover more stable and transparent closing prices.
FPI Investment Landscape
Addressing concerns about foreign investor sentiment, Pandey emphasized that regulatory factors are not the primary driver of investment decisions. He noted that flows are influenced more significantly by returns, earnings growth, and global market conditions.
| Investment Parameter: | Current Status |
|---|---|
| Total FPI Investment: | $900.00 billion |
| Recent Outflows: | $18.00 billion |
| Market Characteristic: | Cyclical movements |
Pandey highlighted that India's market framework is already stable and accessible, with investor decisions driven by cross-market comparisons rather than regulatory barriers.
Corporate Bond Market Development
The SEBI Chairman outlined the current state and future plans for India's corporate bond market. Outstanding corporate bonds now stand at approximately ₹56.00 lakh crore, representing around 60.00% of bank credit to industry and services, up from about 40.00% a few years ago.
| Bond Market Requirements: | Focus Areas |
|---|---|
| Issuer Base: | More participants needed |
| Credit Rating Participation: | Expand beyond AAA bonds |
| Trading Volumes: | Higher secondary market activity |
| Liquidity Measures: | Bond derivatives development |
Registration and Process Improvements
SEBI is actively working to streamline FPI registration through digitization and reduced paperwork. The regulator has introduced the Single Window Automatic & Generalised Access for Trusted Foreign Investors (Swagat-FI) system, aimed at providing timeline clarity, utilizing digital signatures, and improving KYC coordination with the Reserve Bank of India.
"We are looking at registration, which is faster," Pandey stated, emphasizing the commitment to making Indian markets more accessible to international investors.
Collaborative Efforts
SEBI and RBI are working together on bond derivatives and other measures to improve market liquidity. The Chairman declined to comment on withholding tax and capital gains tax differences between equity and debt, citing the upcoming Union Budget and noting that such decisions rest with the finance ministry.
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