SEBI proposes major overhaul of exchange regulations, seeks public comments on technology framework

The Securities and Exchange Board of India (SEBI) has initiated a comprehensive review of its regulatory framework governing stock exchanges, clearing corporations and commodity derivatives exchanges to promote ease of doing business and reduce compliance burden in the securities market.

The Securities and Exchange Board of India (SEBI) has initiated a comprehensive review of its regulatory framework governing stock exchanges, clearing corporations and commodity derivatives exchanges to promote ease of doing business and reduce compliance burden in the securities market. In a press release issued on Monday, the market regulator said the review is aligned with its vision of "optimal regulation" and aims to simplify regulatory requirements, eliminate obsolete provisions and rationalise reporting obligations for market infrastructure institutions.

SEBI said the exercise involves a detailed review of the Master Circular for Stock Exchanges and Clearing Corporations as well as the Master Circular for Commodity Derivatives. The regulator is undertaking the review through a consultative process involving stakeholders from across the market ecosystem. According to SEBI, the key objectives of the review include simplification of regulatory content, removal of redundancies, delegation of responsibilities, rationalisation of periodic filings and incorporation of stakeholder suggestions.

As part of the initiative, SEBI has already released four consultation papers focused on measures to improve ease of doing business for stock exchanges. Consultations on the administration of exchanges, trading at stock exchanges and exchange-traded derivatives have been completed, while the consultation on trading software and technology for exchanges remains open. Among the major proposals under consideration is the creation of a single consolidated Master Circular for exchanges by merging provisions related to stock exchanges and commodity derivatives exchanges. SEBI has also proposed issuing a separate Master Circular for clearing corporations and a separate consolidated circular covering common information technology-related provisions for Market Infrastructure Institutions (MIIs).

The regulator said the proposed changes could reduce the size of the Master Circular for exchanges by nearly 50 per cent. Other measures include discontinuation of several reports currently submitted to SEBI, with oversight responsibilities proposed to be shifted to MII committees or addressed through public disclosures. SEBI has also proposed ending the requirement for registration of investment managers to provide Direct Market Access facilities and introducing a single-window registration mechanism for brokers offering Smart Order Routing services.

Additional proposals include a review of the system and network audit framework for MIIs, withdrawal of Close to Money norms for options in goods, clearer allocation of responsibilities for monitoring position limits, revision of the client code modification framework, liberalised norms for liquidity enhancement schemes and merger of investor protection funds across equity and commodity segments. SEBI said the revised Master Circular for exchanges will be issued after considering public feedback on the consultation papers. Comments on the fourth consultation paper on trading software and technology for exchanges can be submitted until July 13, 2026. (ANI)