Following a whirlwind year of extensive regulatory changes, India's securities market watchdog, the Securities and Exchange Board of India (Sebi), is poised to shift gears in 2026. The focus is expected to move away from introducing fresh, disruptive rules towards consolidating and implementing the sweeping overhauls it unveiled in 2025. This transition, coupled with the anticipated progress of the unified Securities Markets Code in Parliament, signals a year dedicated to operational adaptation rather than new regulatory shocks for market participants.
A Year of Implementation and Adaptation
Legal and industry experts anticipate that 2026 will be defined by an operational shift. Intermediaries, fund houses, and listed companies will be busy adapting to the new frameworks established last year. While Sebi has signalled a clear intent to enhance ease of doing business, compliance, and enforcement, this transition period is likely to test the resilience and adaptability of the market ecosystem.
Nirali Mehta, partner at Mindspright Legal, highlighted the scale of the 2025 changes, noting they were comprehensive rather than sector-specific. She stated, "Sebi's major regulatory overhaul in 2025 covering mutual funds, LODR (listing obligations and disclosure requirements), stockbroker regulations, settlement frameworks and AIF (alternative investment fund) norms is expected to make 2026 a year focused on consolidation, improved ease of doing business and stronger market discipline."
Key Reforms from 2025 Setting the 2026 Agenda
The most debated reform of 2025 was the proposed comprehensive overhaul of the Total Expense Ratio (TER) framework for mutual funds. Sebi's proposals aimed at clearer cost disclosures, removal of opaque expense components, and tighter caps on brokerage costs. Initially causing significant unease in the industry, the regulator provided some relief at its 17 December 2025 board meeting by announcing that the TER changes would be implemented from 1 April 2026.
Beyond mutual funds, Sebi's reform spree extended to stockbroker regulations and listing obligations. The changes aimed to simplify procedures, align rules with technology-driven markets, and bolster governance standards. Additionally, several ease-of-doing-business initiatives were introduced, including rationalized disclosures and streamlined filings, though these may cause short-term friction during adoption.
Sidharth Kumar, senior associate at BTG Advaya, pointed out that the regulator may pause major overhauls as the finance ministry prepares to introduce the Securities Markets Code (SMC) in Parliament. This code, first announced in the 2021–22 Union Budget, seeks to merge the Sebi Act, the SCRA, and the Depositories Act to reduce regulatory overlap.
Selective Tweaks and Unwavering Enforcement
Even within this consolidation phase, certain areas may see further refinement. Sebi chief Tuhin Kanta Pandey has indicated that revamps to LODR regulations are under consideration to reduce complexity for listed companies. Changes to takeover regulations under SAST and settlement norms are also possible focus areas for 2026.
However, Sebi's stance on enforcement is not expected to soften. The regulator has significantly stepped up action against unregistered financial influencers (finfluencers), trading academies, and entities offering stock advice without proper registration. High-profile cases, like that of trader Avadhut Sathe, underscore this crackdown. Sebi has clearly indicated that such enforcement will continue to protect retail investors from unregulated advice on social media.
As the market navigates this transition, calls for greater clarity and support persist. Sandeep Parekh, managing partner at Finsec Law Advisors, advocated for a principle-based approach in areas like insider trading and fraud, warning that overly tight definitions could inadvertently ensnare innocent entities. The coming year will ultimately test how smoothly the ambitious reforms of 2025 are integrated into the daily functioning of India's capital markets.
