The Securities and Exchange Board of India (SEBI) will soon establish a working group to conduct a comprehensive review of the frameworks for short selling and the Securities Lending and Borrowing Mechanism (SLBM), according to chairman Tuhin Kanta Pandey. He made this announcement during the CNBC-TV18 Global Leadership Summit 2025.
Pandey emphasized the importance of an active Securities Lending and Borrowing scheme, stating, “This is critical for improving price discovery and facilitating interlinkage between the cash and derivatives segments.” He noted that the existing framework, initially introduced in 2008 and modified several times, remains significantly underdeveloped compared to other jurisdictions.
The regulatory body will also introduce a closing auction framework, which is designed to align with global standards but will be tailored to Indian requirements. This new framework aims to reduce end-of-day volatility, enhance price discovery, and facilitate easier execution of trades by large investors.
Moreover, SEBI is planning a thorough review exercise for the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, which mandate that listed companies adhere to specific corporate governance standards and ensure timely, transparent disclosures to shareholders and the public. Pandey mentioned that the regulator is open to reviewing the framework for open-market buybacks, which were phased out last year to enhance transparency and protect minority shareholders.
In discussing derivatives, Pandey remarked, “Derivatives play a vital role in price discovery and risk management. Our approach will remain data-oriented, calibrated, and consultative,” adding that SEBI aims to deepen the cash equities market to promote capital formation.
When inquiring about a potential ban on weekly expiries, he cautioned against speculation, stating, “Please don’t put words in my mouth. I think I’ve said enough on this subject. The certainty right now is that the system is on and it is working. If we have to take further steps, we will issue a consultation paper.”
Addressing concerns regarding foreign portfolio investor (FPI) outflows, Pandey expressed confidence in FPIs’ commitment to India’s economic narrative. While discussions often emphasize net outflows, he clarified that “a significant portion of FPI activity involves primary market investments, which offset secondary market movements.” He assured that India’s markets have become increasingly resilient to capital flow fluctuations, with strong domestic flows complementing FPI activity.
On the topic of a proposed cap on brokerage fees for mutual funds, Pandey stated that SEBI is engaged in “sincere consultations” and that no final decision has been reached. “This is not a decision, but this is certainly food for thought for everyone to comment on… We need to put it to wider public consultation,” he added.
Pandey reiterated that SEBI’s principle of ‘optimum regulation’ aims to prepare the markets for future challenges.
The article was published on November 7, 2025.
