SEBI Launches Comprehensive Review of Stock Exchange Regulations

Photo credit: ANI, SEBI

The Securities and Exchange Board of India (SEBI) has launched a comprehensive review of regulations governing stock exchanges, clearing corporations and commodity derivatives exchanges. The exercise includes a proposed overhaul of technology-related rules as part of efforts to improve ease of doing business and reduce compliance burdens in the securities market.

In a press release issued on Monday, SEBI said the exercise is aligned with its vision of "optimal regulation" and is aimed at simplifying regulatory requirements, removing outdated provisions and rationalising reporting obligations for market infrastructure institutions (MIIs).

According to the regulator, the review covers the master circular for stock exchanges and clearing corporations as well as the master circular for commodity derivatives. SEBI said the process is being carried out through consultations with stakeholders across the market ecosystem.

"The focus and objective of review is directed towards simplification of content, removal of redundancies/obsolete requirements, delegation of responsibilities, rationalization of periodic filings, review of suggestions received from stakeholders, etc", the release said.

As part of the review, SEBI has already released four consultation papers aimed at improving ease of doing business for stock exchanges. Consultations relating to exchange administration, trading at stock exchanges and exchange-traded derivatives have been completed, while comments are still being invited on the consultation paper covering trading software and technology frameworks.

Among the key proposals is the creation of a single consolidated master circular for exchanges by merging provisions applicable to stock exchanges and commodity derivatives exchanges. SEBI has also proposed separate master circulars for clearing corporations and a consolidated circular covering common information technology provisions applicable to MIIs.

According to SEBI, the proposed restructuring could reduce the size of the master circular for exchanges by nearly 50 per cent. The regulator has also suggested discontinuing several reports currently submitted to SEBI, with oversight responsibilities proposed to be shifted to MII committees or addressed through public disclosures.

Other proposals under consideration include ending the requirement for registration of investment managers providing direct market access facilities, introducing a single-window registration system for brokers offering smart order routing services, reviewing the system and network audit framework for MIIs, and liberalising norms governing liquidity enhancement schemes.

SEBI has further proposed withdrawing close to money (CTM) norms for options in goods, revising the client code modification framework, clarifying responsibility for monitoring position limits and merging investor protection funds across equity and commodity segments.

The regulator said the revised master circular for exchanges will be finalised after considering stakeholder feedback. Public comments on the consultation paper relating to trading software and technology for exchanges can be submitted until July 13, 2026, after which SEBI is expected to take a final view on the proposed changes.