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.

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.

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.

Securities and Exchange Board of India (Sebi) has announced enhanced disclosure standards for initial public offerings, with chairman Tuhin Kanta Pandey emphasizing stricter transparency requirements during a recent industry event. The new guidelines aim to improve the quality of IPO documentation and strengthen investor protection mechanisms.

Enhanced Disclosure Requirements

Issuers must now provide comprehensive capital structure disclosures that clearly explain past capital-raising activities, preferential allotments, and any changes in control occurring close to the IPO timeline. Pandey stressed the importance of greater business model clarity, requiring transparent presentation of revenue and cost drivers.

The management discussion and analysis sections must move beyond basic narration to provide detailed explanations of both internal and external performance drivers. This shift represents a significant enhancement in the depth of information required from IPO applicants.

Strengthened Due Diligence Standards

Sebi's inspections have revealed concerning gaps in current due diligence practices. Pandey noted that due diligence processes are not always independent and frequently rely heavily on issuer undertakings rather than independent verification.

The new requirements mandate independent verification of projections, particularly for working capital and capital expenditure estimates. Investment bankers must maintain comprehensive backup documentation for all material statements included in IPO documents.

Market Performance and Pipeline

India continues to demonstrate strong IPO market performance, maintaining its global leadership position. The country ranks first worldwide in terms of IPO numbers and third in terms of fundraising value.

Sebi's internal estimates indicate a robust fundraising pipeline, with potential for issuers to raise an additional ₹1.50 lakh crore in upcoming offerings.

Valuation Concerns and Market Dynamics

Pandey highlighted significant concerns regarding valuation mismatches between unlisted share markets and IPO book-building processes. The disparity between pricing in unlisted markets and prices discovered during formal IPO procedures represents a key regulatory challenge.

The chairman acknowledged that pre-listing and post-listing environments operate as "different worlds," with substantial numbers of unlisted companies requiring regulatory attention. Sebi plans to explore solutions in consultation with the Ministry of Corporate Affairs.

NSE Settlement Development

In a separate announcement, Pandey confirmed that Sebi has agreed in principle to the National Stock Exchange's settlement application related to the co-location case. The settlement process is currently under review by various regulatory committees.

NSE had filed two applications in June 2025 to settle the long-standing co-location and dark fiber cases, offering to pay over ₹1,300 crore. The regulator indicated it expects to issue a no-objection certificate for the NSE IPO by month-end, marking progress in resolving these regulatory matters.