SEBI to revamp short-selling, securities lending rules
SEBI is preparing a set of capital market reforms aimed at making trading more efficient, tightening safeguards, and further deepening India’s markets.Securities and Exchange Board of India (SEBI) chairman Tuhin Kanta Pandey said on Saturday that the regulator is reassessing the rules for short selling and for the securities lending and borrowing (SLB) mechanism to enhance liquidity and improve price discovery.
Short selling involves selling shares that have been borrowed, while the SLB framework enables investors to lend and borrow these securities.According to Pandey, this review is part of a wider initiative to strengthen India’s capital markets, responding to feedback and demands from various market participants.SEBI also plans to tackle the issue of parallel clearing in tender offers, share buybacks, and offers for sale, which currently raises transaction costs.
“We are fixing this to improve capital efficiency and reduce the compliance burden,” Pandey said.In addition, SEBI is considering a graded compliance framework for stockbrokers, calibrated to their size, client risk exposure, and dependence on technology. The regulator is also updating norms for depository participants to streamline compliance and bolster protections against fraud, he added.
SEBI intends to expand the automated give-up and take-up facility to custodial clients in the cash segment, including portfolio management services and alternative investment funds. This is expected to ensure that funds are not unnecessarily locked while waiting for custodian approvals. The regulator is also rolling out the modified closing auction session (CAS). Further, it plans to widen the use of its Samuhik Prativedan Manch reporting platform to cover depositories as well, so that a single filing can meet the requirements of both exchanges and depositories. To encourage more secondary market activity in corporate bonds, where the outstanding amount is about ₹61 lakh crore, SEBI is working on a dedicated market-making framework.
Source: The Economic Times
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