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SEBI has proposed a major overhaul of trading-related rules across stock exchanges to simplify regulations and reduce compliance burdens. In a consultation paper, the market regulator suggested merging multiple circulars covering trading norms, price bands, circuit breakers, bulk and block deals, margin trading, client codes, and trading hours into a single, unified framework. The move aims to improve clarity, consistency, and ease of doing business across equity and commodity markets. SEBI has also recommended removing outdated provisions, streamlining disclosures, updating margin trading norms, and introducing a flexible liquidity enhancement framework. Public feedback has been invited until January 30, with the changes expected to strengthen transparency and operational efficiency.
Markets regulator Securities and Exchange Board of India (SEBI) has proposed a comprehensive overhaul of the trading-related framework at stock exchanges, with the objective of simplifying regulations, removing duplication, and reducing compliance requirements for market participants. Advertisement
The proposals, outlined in a consultation paper issued on Friday, are part of SEBI's broader effort to improve ease of doing business across stock exchanges, including commodity derivatives platforms. The regulator has suggested consolidating multiple overlapping rules into a single, unified framework applicable across equity and commodity segments.
According to SEBI, existing provisions related to trading, price bands, circuit breakers, bulk and block deals, call auction mechanisms, liquidity enhancement schemes, margin trading facility (MTF), unique client codes (UCC), PAN requirements, trading hours, and daily price limits are currently scattered across various circulars. These would be merged into one consolidated framework to improve clarity and consistency.
SEBI has also proposed separating provisions that are specifically relevant to clearing corporations. These would be moved into a dedicated master circular to avoid regulatory overlap and improve operational efficiency.
To enhance transparency and reduce manual compliance, SEBI has suggested merging bulk and block deal disclosures. Under the proposal, disclosures would shift from the UCC level to the client PAN level, easing reporting obligations for brokers while maintaining transparency.
The regulator has recommended that market-wide circuit breakers, dynamic price band flexing, IPO price bands, and call auction procedures be presented in a tabular format. It has also proposed removing outdated operational examples and duplicative instructions that no longer serve regulatory objectives.
Changes have also been proposed to the margin trading facility framework. SEBI has suggested increasing the minimum net worth requirement for brokers offering MTF from INR 3 crore to INR 5 crore or higher, as may be specified by stock exchanges. Timelines for submission of net worth and auditor certificates would be aligned with standard financial reporting cycles, while redundant due diligence clauses would be removed.
Obsolete market-making provisions in the cash segment are proposed to be replaced by a principle-based Liquidity Enhancement Scheme framework. This unified framework would apply across equities, derivatives, and commodities, giving exchanges greater flexibility in designing schemes, conducting half-yearly board reviews, and offering incentives. Higher incentive caps have been proposed for new exchanges or newly launched segments.
Several outdated provisions have been identified for removal, including negotiated-deal exemptions, guidelines for a dedicated debt segment, forward contracts in commodities, MOU-based trading, and certain reporting requirements that are no longer considered necessary.
Trading hours across all market segments equity, derivatives, commodities, currency, request-for-quote platforms, EGR, and the Social Stock Exchange would be consolidated into a single section to improve clarity.
SEBI has also proposed liberalising client code modification rules to allow genuine corrections, permit PAN-linked multiple UCCs for specific client categories, simplify fund and obligation transfers among foreign portfolio investor family accounts, and increase waiver frequency to once a month. Quarterly waiver reporting to SEBI would be discontinued.
Other proposals include harmonising penalties between stock exchanges and clearing corporations, clarifying rules on short selling and securities lending and borrowing, and integrating commodity-specific disclosures into the unified framework.
SEBI has invited public comments on the proposals until January 30.
Source: PTI
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