SEBI’s Latest Initiative to Enhance Business Operations: Implications for Stock Exchanges and Brokers
The Securities and Exchange Board of India (SEBI) has initiated a comprehensive review of regulations affecting stock exchanges, clearing corporations, and commodity derivatives exchanges. This review aims to overhaul technology-related rules to enhance the ease of doing business and lessen compliance burdens within the securities market. SEBI’s efforts are aligned with its vision of “optimal regulation,” focusing on simplifying regulatory requirements and eliminating outdated provisions.
The review encompasses the master circulars for stock exchanges and clearing corporations, as well as those for commodity derivatives. SEBI is conducting this process through consultations with stakeholders across the market ecosystem. The regulator emphasized that the review aims to simplify content, remove redundant requirements, delegate responsibilities, and rationalize periodic filings based on stakeholder feedback.
As part of this initiative, SEBI has already released four consultation papers aimed at improving operational efficiency for stock exchanges. Consultations on exchange administration, trading at stock exchanges, and exchange-traded derivatives have been completed. However, feedback is still being sought on the consultation paper related to trading software and technology frameworks. A key proposal includes creating a single consolidated master circular for exchanges by merging provisions applicable to both stock exchanges and commodity derivatives exchanges.
SEBI’s restructuring proposals could potentially reduce the size of the master circular for exchanges by nearly 50%. The regulator has also suggested discontinuing several reports currently submitted to SEBI, with oversight responsibilities shifting to market infrastructure institution committees or being addressed through public disclosures. Other proposals include eliminating the registration requirement for investment managers providing direct market access, introducing a single-window registration system for brokers offering smart order routing services, and revising the client code modification framework.
The revised master circular for exchanges will be finalized after considering stakeholder feedback. Public comments on the consultation paper regarding trading software and technology for exchanges can be submitted until July 13, 2026.
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