SEBI Reviews Short-Selling and SLB Framework, Plans New Measures for Debt and Derivatives Markets

The Securities and Exchange Board of India (SEBI) is reviewing several market regulations, including the short-selling and securities lending and borrowing (SLB) framework, as part of plans to deepen the domestic capital market, as per news reports.  

The proposals were outlined by SEBI Chairman Tuhin Kanta Pandey while speaking at the ET Now Market Summit on Friday. 

Focus on Equity and Derivatives Markets 

The regulator is examining changes to the SLB mechanism and short-selling rules to improve the connection between the cash and derivatives segments and support market liquidity.  

SEBI is also considering the introduction of longer-tenure futures and options contracts to widen the equity derivatives market. 

For commodity derivatives, the regulator is studying measures such as extending early pay-in benefits to options contracts, a phased move towards physical settlement in selected agricultural commodities and a review of existing position limits. 

Debt Market and AI Guidelines 

Pandey said SEBI is working with the Reserve Bank of India (RBI) on the introduction of bond index derivatives.  

The regulator is also preparing a market-making framework for corporate bonds, measures to strengthen the municipal bond market, and the tokenisation of corporate bonds. 

SEBI is to issue guidelines on the use of artificial intelligence in capital markets. The proposed framework will cover areas including surveillance, fraud detection and investor services, while addressing issues related to transparency, cybersecurity, bias, and accountability. 

Other Areas Under Review 

SEBI is reviewing the Innovators Growth Platform to improve fundraising opportunities for companies operating in sectors such as artificial intelligence, semiconductors, clean energy, biotechnology, advanced materials and defence technology. 

In addition, SEBI is examining changes to regulations covering municipal debt securities, portfolio management services, delisting norms, and listing obligations and disclosure requirements (LODR).  

It is also working towards simplifying know-your-customer (KYC) processes for foreign portfolio investors and non-resident Indians. 

Read More: Indian Railways to Introduce New IRCTC Website with Improved Ticket Booking System on July 15, 2026! 

Conclusion 

The regulator is reviewing multiple market frameworks, including short-selling, SLB and bond markets, while also examining regulatory changes in AI, listings and investor access. 

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