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 rules and trading hours
Price bands and circuit breakers
Bulk and block deal disclosures
Call auction mechanisms
Liquidity Enhancement Schemes (LES)
Margin Trading Facility (MTF)
Unique Client Code (UCC) and PAN requirements
Daily price limits

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:

Merging bulk and block deal disclosures
Shifting disclosure dissemination from UCC level to PAN level

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dynamic price band flexing, IPO price bands, and call auction procedures will be presented in tabular formats, while outdated examples and duplicative clauses will be removed.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:

Increasing the minimum net-worth requirement for brokers from ₹3 crore to ₹5 crore or higher, as decided by exchanges
Aligning net-worth and auditor certificate submission timelines with standard financial reporting cycles
Removing redundant due-diligence clauses

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:

Equities
Derivatives
Commodities

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:

Negotiated-deal exemptions
Guidelines for a dedicated debt segment
Forward contracts in commodities
MOU-based trading mechanisms
Unnecessary and duplicative reporting requirements

Liberalised Client Code Modification Rules

To allow genuine operational corrections, SEBI plans to:

Liberalise client code modification norms
Permit PAN-linked multiple UCCs for specific client categories
Enable easier obligation transfers among FPI family accounts
Increase waiver frequency to once a month
Discontinue quarterly waiver reporting to SEBI

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:

Mandatory daily disclosures
Clear demarcation of responsibilities between exchanges and clearing corporations

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.