The Securities and Exchange Board of India (SEBI) is set to deliberate on 11 regulatory proposals during its board meeting on December 17. These proposals encompass significant reforms affecting broker regulations, the mutual fund expense structure, the administration of exchanges, and the potential introduction of a closing-auction session, as reported by sources familiar with the agenda.
Additional items on the agenda include the rationalization of disclosure and lock-in norms under the Initial Public Offering (IPO) framework, simplification of compliance for debt-market issuers, relaxed Know Your Customer (KYC) requirements for Non-Resident Indians (NRIs), standardized processes for mutual-fund folio onboarding, the possibility of incentives to encourage retail participation in public debt issues, and enhanced transparency and reporting standards for alternative investment funds.
Closing-Auction Mechanism
The proposed closing auction session for equity markets, which has been under discussion for some time, aims to introduce a more effective end-of-day price discovery process through an auction format rather than relying on the current Volume Weighted Average Price-based system. This change is intended to reduce volatility during the last minutes of trading and establish a more accurate benchmark for settlements, index calculations, and fund Net Asset Values (NAVs). Despite long-term discussions, resistance from some domestic institutional investors regarding implementation costs and trading system changes has persisted. SEBI issued a revised consultation paper in August following an initial draft released a year earlier. “A closing auction is a basic feature in most developed markets. India adopting it is long overdue,” stated one source.
Exchange Administration
SEBI is also working to streamline the rules governing exchanges and clearing corporations to eliminate redundant filings, standardize circulars, and simplify procedural approvals. Potential plans include merging the investor protection funds of the equity and commodity segments into a single pool and introducing a uniform three-year lookback period for claims in broker-default cases.
The anticipated overhaul of broker and mutual fund regulations, which date back to the 1990s, is poised to be significant. For brokers, SEBI intends to update definitions, ease compliance, and address gaps related to algorithmic trading, online brokerage models, and fee structures. Concurrently, mutual fund regulations are slated for modernization, including a refinement of the total expense ratio framework and adjustments to cap brokerage fees that may be less stringent than initial proposals.
IPO Norms
Amendments to the Issue of Capital and Disclosure Requirements Regulations will aim to simplify IPO procedures and adjust lock-in norms, noting that depositories currently cannot impose lock-ins on pledged shares.
The board will also review a report concerning conflicts of interest, recommending public disclosure of assets and liabilities, stricter policies regarding gifts, an anonymous whistleblower system, and instituting a two-year cooling-off period before post-retirement roles can be undertaken.
An email sent to SEBI seeking comment did not receive a response.
Published on December 7, 2025.
