SEBI weighs reforms to stockbroking, IPO, and research analyst norms
What's the story
The Securities and Exchange Board of India (SEBI) is considering a host of reforms to improve market efficiency. The proposed changes include variable net-worth requirements for stockbrokers, improvements in IPO price discovery mechanisms, and easing compliance requirements for research analysts. SEBI Chairman Tuhin Kanta Pandey announced these initiatives at the ICICI Securities Investor Conference.
Broker regulations
Improving price discovery for IPOs
Pandey said, "We are currently reviewing the framework for variable net-worth requirements for stockbrokers so that capital requirements better reflect operational scale and risk." The regulator is also looking into improving price discovery through a pre-open call auction mechanism for IPOs and relisted securities. This would ensure more stable and efficient market openings.
Analyst regulations
Easing compliance for research analysts
SEBI is also working on easing compliance requirements for research analysts. This includes rationalizing obligations like call recording during institutional interactions. The regulator is also looking at a more practical framework for mutual funds to use intraday borrowing, not just as a contingency measure but also as a tool for managing temporary liquidity mismatches.
Market expansion
Initiatives to boost corporate bond market liquidity
On the corporate bond market, Pandey said a working group is finalizing operational details for a market-making framework aimed at improving liquidity. He added that SEBI and the Reserve Bank of India (RBI) are jointly working on introducing derivatives linked to corporate bond indices. The regulator is also working with custodian banks and the RBI to further reduce registration and onboarding timelines for Foreign Portfolio Investors (FPIs).
Regulation review
Updates on stockbroker regulations
Pandey said the regulator has also reviewed stockbroker regulations to simplify compliance and align rules with evolving market practices. This includes a common reporting platform to reduce duplication across exchanges, a rationalized penalty framework, and a calibrated approach toward technical glitches. He also highlighted that equity issuances touched ₹4.5 trillion in FY26 while IPOs raised about ₹1.9 trillion through 366 issues.
Regulatory approach
SEBI's approach toward regulation and market growth
Pandey said SEBI's approach remains focused on "optimum regulation" that protects investors, preserves market integrity, and enables market growth while keeping access and compliance processes efficient. He noted that India's market capitalization has risen from 69% of GDP a decade ago to around 128% currently. Mutual fund assets have expanded from ₹12 trillion to over ₹80 trillion, with the number of securities market investors reaching around 145 million at a growth rate of over 20% annually.