Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey highlighted the remarkable surge in India's capital markets across multiple segments including equity, derivatives, mutual funds, real estate investment trusts, infrastructure investment trusts, and corporate bonds. Speaking at the Association of National Exchanges Members of India 15th International Capital Market Convention 2026 in Chennai, Pandey presented compelling data showcasing the market's robust growth trajectory.

Investor Base and Market Growth

The Indian capital markets have witnessed unprecedented expansion in investor participation and fundraising activities. The growth metrics demonstrate the market's increasing appeal and accessibility to retail and institutional investors alike.

Regulatory Framework Modernisation

Pandey emphasised SEBI's commitment to building a smarter regulatory architecture that balances compliance efficiency with robust investor protection. The regulator has introduced several key initiatives to streamline operations while maintaining market integrity.

SEBI recently notified the stockbrokers regulations 2026, which permits diversification into activities overseen by other financial sector regulators, subject to prescribed safeguards. This regulatory evolution reflects the changing landscape of financial services and the need for integrated oversight.

Technical Glitch Framework Revision

A significant development announced by Pandey was the revised framework addressing technical glitches in stockbrokers' trading systems, issued on Friday. The revamped framework introduces several compliance simplifications specifically designed to benefit smaller stockbrokers.

Key Framework Changes

The new eligibility criteria and reporting modifications include:

• Scope Limitation: Framework now applies only to stockbrokers with over 10,000 registered clients
• Compliance Reduction: Approximately 60% of stockbrokers will move out of this framework, reducing their overall compliance requirements
• Extended Reporting Time: Technical glitch reporting timeline extended from one hour to two hours
• Holiday Consideration: Trading holidays now considered when submitting reports
• Unified Platform: Streamlined reporting to single Common Reporting Platform instead of multiple exchanges

Market Infrastructure Development

The SEBI Chairman's remarks underscore the regulator's focus on removing duplication in compliance processes while safeguarding investor protection and market integrity. The substantial clientele and technology dominance criteria for the technical glitch framework demonstrates SEBI's risk-based approach to regulation.

The diversification permissions for stockbrokers into activities overseen by other financial sector regulators, subject to prescribed safeguards, indicates SEBI's recognition of evolving market dynamics and the need for flexible regulatory frameworks that can accommodate innovation while maintaining appropriate oversight.

Markets regulator Sebi has unveiled comprehensive proposals to overhaul the trading-related framework at stock exchanges, targeting simplification of rules, elimination of duplication, and reduction of compliance burden for market participants. The initiative forms part of Sebi's broader strategy to facilitate ease of doing business across all stock exchanges, including commodity derivatives platforms.

Unified Framework Consolidation

Sebi's consultation paper proposes merging multiple overlapping provisions into a single, consolidated framework applicable to both equity and commodity segments. The unified system will encompass:

• Trading rules and price bands
• Circuit breakers and call auction mechanisms
• Bulk and block deal disclosures
• Margin trading facility (MTF) operations
• Unique client code (UCC) and PAN requirements
• Trading hours and daily price limits
• Liquidity enhancement schemes

The regulator suggests carving out provisions specifically applicable to clearing corporations and moving them into a dedicated master circular to avoid regulatory overlap.

Enhanced Transparency and Reporting

To improve market transparency, Sebi proposes significant changes to disclosure mechanisms:

The regulator recommends presenting market-wide circuit breaker rules, dynamic price band flexing, IPO price bands, and call auction procedures in tabular format while removing duplicative or outdated operational examples.

Margin Trading Facility Reforms

Sebi has proposed substantial changes to MTF norms, including key financial requirements:

The proposals include aligning timelines for submitting net-worth and auditor certificates with financial reporting cycles and deleting redundant due diligence clauses.

Liquidity Enhancement and Market Making

The framework proposes removing obsolete market-making provisions for the cash segment and merging them into a principle-based Liquidity Enhancement Scheme (LES) framework. This unified approach will cover equities, derivatives, and commodities uniformly. Under the revised structure, exchanges will gain greater flexibility in designing schemes, conducting half-yearly board reviews, and offering incentives, with higher caps for new exchanges or new segments.

Operational Simplifications

Sebi proposes eliminating several outdated provisions, including negotiated-deal exemptions, guidelines for dedicated debt segments, forward contracts in commodities, MOU-based trading, and unnecessary reporting requirements. Trading hours across all segments—equity, derivatives, commodities, currency, RFQ, EGR, and Social Stock Exchange—will be consolidated into a single section.

Client Code and Compliance Liberalisation

The proposals include liberalising Client Code Modification rules to:

• Permit genuine corrections
• Allow PAN-linked multiple UCCs for specified client categories
• Facilitate easier obligation transfer among FPI family accounts
• Increase waiver frequency to once monthly
• Discontinue quarterly waiver reporting to Sebi

Penalties will be harmonised between exchanges and clearing corporations, while short-selling and securities lending and borrowing provisions will be clarified and incorporated into the main framework with mandated daily disclosures.

Implementation Timeline

Sebi has invited public comments on all proposals until January 30, indicating the regulator's commitment to stakeholder consultation before implementing the comprehensive framework changes.