SEBI Proposes Major Overhaul of Trading Framework at Stock Exchanges

Markets regulator SEBI on Friday, January 9, 2026, floated a proposal to comprehensively revamp the trading-related regulatory framework governing stock exchanges, with the objective of simplifying rules, eliminating duplication, and easing compliance obligations for market participants.

The proposed changes form part of SEBI’s broader effort to promote ease of doing business across all stock exchanges, including commodity derivatives platforms. SEBI has invited public comments on the proposals until January 30.

Single Consolidated Framework Across Segments

In a consultation paper, SEBI recommended consolidating several overlapping and fragmented provisions into a single, unified framework applicable across both equity and commodity segments. These include rules related to trading operations, price bands, circuit breakers, bulk and block deal disclosures, call auction mechanisms, liquidity enhancement schemes, margin trading facility (MTF), unique client codes (UCC), PAN requirements, trading hours, and daily price limits.

SEBI also proposed that provisions specific to clearing corporations be segregated and shifted to a separate master circular to avoid regulatory overlap and improve clarity.

To enhance transparency while reducing manual compliance, the regulator suggested merging bulk and block deal disclosures and shifting dissemination to the client PAN level instead of the UCC level. In addition, market-wide circuit breaker norms, dynamic price band flexing, IPO price bands, and call auction procedures may be presented in a tabular format, with outdated or repetitive operational examples removed.

Rationalisation of Margin Trading Norms

The consultation paper further proposes rationalising MTF norms, including raising the minimum net-worth requirement for brokers from ₹3 crore to ₹5 crore or higher, as determined by exchanges. Timelines for submission of net-worth certificates and auditor reports would be aligned with financial reporting cycles, while redundant due-diligence provisions would be eliminated.

SEBI has also suggested removing obsolete market-making provisions in the cash segment and folding them into a principle-based Liquidity Enhancement Scheme (LES) framework that uniformly applies to equities, derivatives, and commodities. Under the revised framework, exchanges would be given greater flexibility to design schemes, conduct half-yearly board reviews, and offer incentives, with higher caps proposed for new exchanges or newly launched segments.

Several outdated and redundant provisions—such as negotiated-deal exemptions, guidelines for a dedicated debt segment, forward contracts in commodities, MOU-based trading, and superfluous reporting requirements—have been proposed for removal.

Unified Trading Hours Across Segments

Trading hours across all market segments, including equities, derivatives, commodities, currency, request-for-quote (RFQ), EGR, and the Social Stock Exchange, would be consolidated into a single section to improve clarity.

Liberalisation of Client Code Modification Rules

Client Code Modification (CCM) rules are also proposed to be liberalised to allow genuine error corrections, permit PAN-linked multiple UCCs for specific client categories, ease obligation transfers among family accounts of foreign portfolio investors, increase waiver frequency to once a month, and discontinue quarterly waiver reporting to SEBI.

The regulator has further proposed harmonising penalty structures between exchanges and clearing corporations.

Provisions related to short-selling and securities lending and borrowing (SLB) would be clarified and integrated into the main framework, with mandatory daily disclosures and a clear demarcation of responsibilities between exchanges and clearing corporations.

Commodity Disclosures and UPI-based Trading

Commodity-specific disclosures—such as hedge delivery intent, open interest data, and risk disclosures by listed entities—would also be incorporated into the unified circular. Additionally, SEBI has proposed updating norms governing UPI-based trading with blocked amounts in the secondary market, while shifting settlement-related aspects to the clearing corporation master circular. 

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