New Simplified Trading Framework for Stock Exchanges to Ease Compliance Proposed By SEBI
India’s market regulator, Securities and Exchange Board of India (SEBI), has proposed a major overhaul of the trading-related regulatory framework at stock exchanges. The move aims to simplify rules, eliminate duplication, and reduce compliance burden for brokers, exchanges, and other market participants. These proposals are part of SEBI’s broader initiative to enhance ease of doing business across all stock exchanges, including commodity derivatives platforms. 👉 Official source: SEBI Consultation Papers Unified Trading Framework Across Market Segments In its consultation paper, SEBI has suggested consolidating several overlapping provisions into one comprehensive and unified framework applicable to both equity and commodity segments. The proposed consolidation covers regulations related to: Trading hours for all segments—equity, derivatives, commodities, currency, RFQ platforms, EGR, and the Social Stock Exchange—will now be covered under a single consolidated section. Separate Master Circular for Clearing Corporations To prevent regulatory overlap, SEBI has proposed that provisions specifically applicable to clearing corporations (CCs) should be removed from exchange circulars and shifted into a dedicated master circular. Improved Transparency in Trade Disclosures To enhance transparency and reduce manual reporting, SEBI has proposed: Additionally, market-wide circuit breaker rules, dynamic price band flexing, IPO price bands, and call auction procedures will be presented in tabular formats, while outdated examples and duplicative clauses will be removed. Rationalisation of Margin Trading Facility (MTF) Norms SEBI has suggested tightening MTF eligibility norms by: Streamlined Liquidity Enhancement Scheme (LES) Obsolete market-making provisions in the cash segment will be removed and merged into a principle-based LES framework covering: Under the revised structure, exchanges will have greater flexibility to design schemes, conduct half-yearly board reviews, and offer incentives. Higher incentive caps may be allowed for new exchanges or newly launched segments. Removal of Outdated and Redundant Provisions SEBI has proposed scrapping several obsolete provisions, including: Liberalised Client Code Modification Rules To allow genuine operational corrections, SEBI plans to: Penalties will also be harmonised across stock exchanges and clearing corporations. Clarity on Short Selling, SLB, and Commodity Disclosures Short-selling and Securities Lending and Borrowing (SLB) provisions will be clearly incorporated into the main framework, with: Commodity-specific disclosures—such as hedge delivery intent, open interest data, and listed entity risk disclosures—will also be included in the unified circular. UPI-Based Trading and Public Consultation SEBI has further proposed updates to UPI-based secondary market trading with blocked amounts, while moving settlement-related provisions to the clearing corporation master circular. The regulator has invited public comments on these proposals until January 30, after which the final framework is expected to be notified.
