will soon form a working group to comprehensively review the frameworks for short selling and the , chairman Tuhin Kanta Pandey said on Friday.
Speaking at the CNBC-TV18 Global Leadership Summit 2025, Pandey said, “An active Securities Lending and Borrowing scheme is critical for improving price discovery and facilitating interlinkage between the cash and derivatives segments.”
The framework, introduced in 2008 and modified a few times since, “remains significantly underdeveloped as compared to other jurisdictions,” he said.
“From a borrower’s perspective, it facilitates the settlement of securities sold short, while lenders can earn a fee on their idle securities,” he said. Short selling allows investors to benefit from falling stock prices, while SLB enables them to borrow or lend securities to settle such trades.
SEBI will also be introducing the closing auction framework soon, “aligned with other global jurisdictions but suitably designed for our requirements.” It is expected to reduce end-of-day volatility, improve price discovery, and help large investors execute trades more easily.
The regulator is also “soon going to take up a comprehensive review exercise for LODR 2015 and Settlement Regulations,” Pandey said. The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, mandate listed companies to meet specific corporate governance standards and make timely, transparent disclosures to the public and shareholders.
He also said that it is open to reviewing the framework for open-market buybacks, which was phased out last year to promote transparency and protect minority shareholders.
Pandey’s stance on Derivatives
“Derivatives play a vital role in price discovery and risk management…Going forward, our approach will continue to be data-oriented, calibrated and consultative,” Pandey said. “We are focused on deepening our cash equities market to spur capital formation.”
When asked about a possible ban on weekly expiries, Pandey said, “Please don’t put words in my mouth. I think I’ve said enough on this subject. The certainty right now is that the system is on and it is working. Next time, if we have to take any further steps, we will come out with a consultation paper.”
Addressing concerns regarding outflows, Pandey said, “There is a very strong faith that FPIs have in India’s story.” While discussions often focus on net outflows, he explained that “a significant portion of FPI activity involves primary market investments, which offset secondary market movements.”
India’s markets are now far more resilient to capital flow fluctuations and that “FPIs are not subordinate but are now complemented by strong domestic flows,” he said.
Clarifying the status of a proposed cap on brokerage fees for mutual funds, Pandey said SEBI is engaged in “sincere consultations” and no final decision has been taken. “This is not a decision, but this is certainly food for thought, for everyone to comment on this… We need to put it to wider public consultation,” he said.
Pandey said the regulator’s stance of ‘optimum regulation’ is aligned towards making our markets future-ready