Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey on Friday announced that the market regulator is reviewing key regulations, including the Listing Obligations and Disclosure Requirements (LODR) framework and the delisting framework. Additionally, SEBI is collaborating with the Reserve Bank of India (RBI) to introduce derivatives on bond indices, aiming to deepen India's capital markets.
Review of LODR and Delisting Frameworks
Addressing the ET Now Market Summit in Mumbai, Pandey stated, "The LODR framework is currently under review to make it more responsive to emerging governance and disclosure requirements. We will also review the delisting framework further. A well-developed capital market must provide fair entry and fair exit." This underscores SEBI's commitment to ensuring transparency and efficiency in market operations.
Focus on Reducing Market Friction and Deepening Markets
Outlining SEBI's roadmap, the Chairman emphasized that the regulator's focus would be on reducing market friction, deepening markets, and ensuring responsible growth. These priorities aim to enhance the overall health and attractiveness of India's financial markets.
Simplifying Access for Foreign Investors
On foreign investments, Pandey said SEBI would continue efforts to simplify access for global investors. "For foreign investors, we will continue to ease access through simplifying KYC and a risk-based review of disclosure requirements. We will work with other regulators to ease the KYC process for NRIs," he added. He further noted that SEBI's objective is to provide the regulatory clarity sought by international investors, particularly during periods of global uncertainty.
Review of Securities Lending and Borrowing and Short-Selling Frameworks
Highlighting measures to deepen domestic capital markets, Pandey announced that the Securities Lending and Borrowing (SLB) mechanism and short-selling framework are being comprehensively reviewed. "Deepening the cash market is a priority. The Securities Lending and Borrowing and short selling frameworks are being comprehensively reviewed to facilitate inter-linkage between the cash and derivatives markets and enhance liquidity," he said.
Expansion of Derivatives Ecosystem
The SEBI chief also indicated plans to expand India's derivatives ecosystem. "We will also be looking to bring in, along with RBI, derivatives on bond indices," he said. He further mentioned that development of longer-term futures and options contracts would be an important part of strengthening the derivatives market.
Resilience of Indian Markets Amid Global Volatility
On capital raising activity, Pandey noted that despite global volatility, Indian markets have remained resilient. He reported that in April and May of FY27, the capital market helped raise more than Rs 1.5 lakh crore, including around Rs 70,000 crore through equity and about Rs 86,000 crore through corporate bonds. While IPO activity was relatively subdued during the period, the pipeline of upcoming public issues remains strong at around Rs 1.5 lakh crore.
Guidelines on Responsible Use of AI in Capital Markets
The SEBI Chairman also announced that the regulator would issue detailed guidelines on the responsible use of artificial intelligence in capital markets. "SEBI will issue detailed guidelines on the responsible use of AI in capital markets," he said, adding that the regulator plans to integrate IOSCO's AI supervisory toolkit into its AI strategy for regulated entities.
SEBI's Regulatory Approach
Emphasizing SEBI's regulatory philosophy, Pandey stated, "At SEBI, our approach has been one of optimum regulation. Regulation which is effective, but not excessive. Regulation which reduces risk, while allowing innovation." He reiterated that while SEBI would continue to support innovation and market development, it would act firmly against fraud, manipulation, and any misuse of investor funds to protect market integrity and investor confidence.
