MUMBAI: The Securities and Exchange Board of India (Sebi) on Friday proposed a sweeping clean-up of stock exchange regulations, aiming to eliminate redundancies, retire outdated provisions and improve ease of doing business for exchanges and market participants.
As part of the overhaul, the market regulator has suggested raising the minimum net-worth requirement for stockbrokers offering the margin trading facility (MTF) to ₹5 crore or higher from the current ₹3 crore. The existing threshold, introduced in 2004 as a safeguard to ensure only institutional participants offered margin trading, has not been reviewed since 2022, Sebi said. Under the proposal, exchanges would also be allowed to revise net-worth requirements from time to time without seeking prior approval from the regulator.
MTF allows investors to purchase securities by paying only a portion of the total value upfront, with the broker funding the balance, subject to prescribed margins and regulatory norms.
Sebi has also proposed revising timelines for the submission of net-worth certificates by brokers offering MTF. For the half-year ended 30 September, certificates would need to be submitted within 45 days, while for the half-year ended 31 March, the timeline would be 60 days.
In August 2025, Sebi had aligned net-worth certificate submission timelines with those for declaring financial results under listing regulations. To maintain consistency, it has now proposed extending the timeline for submitting auditor certificates in line with the revised net-worth timelines.
Another key proposal is the removal of market-making provisions issued in 2000, which Sebi said have become obsolete and are no longer used by exchanges. Exchanges currently prefer liquidity enhancement schemes (LES), which are more flexible and principle-based.
The draft paper follows comments by finance minister Nirmala Sitharaman in the Union Budget for FY24 on simplifying compliance and reducing costs for financial sector participants through a consultative process. As part of this effort, Sebi released a consultation paper in October last year on ease-of-doing-business measures for stock exchange administration. The current paper, the second in that series, proposes changes to existing norms with a view to issuing a single consolidated circular on trading-related provisions.
The consultation paper also seeks to bring clarity to market-making requirements for companies listed on the SME platform following schemes of arrangement such as demergers. While market making is mandatory for SME-listed companies, there was a lack of clarity in such cases. Sebi proposes to incorporate an earlier clarification that market making would be required unless the demerged company has already complied with the requirement.
The regulator has recommended merging provisions for commodity derivatives with those for equity cash and equity derivatives under a common framework. This would include market making and other schemes aimed at enhancing trading volumes. Approval, monitoring and review processes would be simplified, with a half-yearly board review replacing multiple reviews and approvals.
Other proposals focus on easing operational requirements for exchanges and market participants. These include simplifying rules around client code modifications, increasing waivers for genuine errors from once a quarter to once a month, discontinuing quarterly reporting to Sebi on such waivers and replacing special inspections with regular monitoring by exchanges. The paper also proposes removing the requirement for exchanges to submit end-of-day surveillance reports to Sebi on pre-open call auction alerts, allowing exchanges to take action directly.
In the commodity derivatives segment, Sebi has proposed incentivizing farmers and farmer producer organizations (FPOs) to participate in options on futures and options on goods by using the option premium paid by them.
The draft paper is open to comments till 30 January 2026.
