Sebi plans simpler rulebook for stock exchanges, doing away with obsolete provisions

Capital markets regulator Sebi on Monday proposed an overhaul of the regulatory framework governing stock exchanges and clearing corporations, as part of its broader ease of doing business initiative. In a consultation paper, the regulator said it aims to simplify the Master Circular for Stock Exchanges & Clearing Corporations by removing obsolete provisions, reducing compliance requirements and consolidating multiple circulars into a simpler framework. Public comments on the proposals have been invited until July 13, 2026.

The latest consultation is the fourth in a series of reviews undertaken by Sebi to simplify regulations for market infrastructure institutions (MIIs). The regulator had earlier sought feedback on proposals related to administration, trading and exchange-traded derivatives.

Among the key proposals, Sebi plans to issue a single master circular for stock exchanges by consolidating provisions relating to stock exchanges and commodity derivatives exchanges. It also intends to issue separate master circulars for clearing corporations and another consolidated circular covering common information technology requirements applicable to market infrastructure institutions.

The regulator has also proposed reducing the number of periodic reports submitted to Sebi by discontinuing reports that have become redundant or shifting them to oversight by MII committees.

Other proposed changes include discontinuing the requirement for registration of investment managers providing Direct Market Access (DMA) services, introducing a single-window registration framework for brokers offering Smart Order Routing (SOR), reviewing the existing system and network audit framework for market infrastructure institutions and discontinuing the close-to-money (CTM) norms for option contracts.

Sebi has also suggested reviewing disclosure requirements for investors in commodity derivatives, revisiting norms governing position limits across products, updating the client code modification framework and merging investor protection funds for equity and commodity segments.

According to the regulator, the review is intended to create a more efficient and principles-based regulatory framework while reducing duplication and improving operational flexibility for exchanges and clearing corporations.The final framework will be notified after considering comments received from market participants and other stakeholders.