Chairman Tuhin Kanta Pandey announced that the Securities and Exchange Board of India (SEBI) will establish a working group to thoroughly examine the regulations for short selling and the Securities Lending and Borrowing Mechanism (SLBM). During the CNBC-TV18 Global Leadership Summit 2025, Pandey emphasized the importance of an effective Securities Lending and Borrowing scheme in enhancing price discovery and promoting connectivity between the cash and derivatives markets.

He mentioned that the framework, which was first introduced in 2008 and has been adjusted several times since then, is still significantly less developed compared to other regions. Pandey mentioned that the regulator will soon conduct a thorough review of the LODR 2015 and Settlement Regulations. 

Also Read: European Union Negotiators in Delhi for India-EU FTA Talks

The SEBI Regulations of 2015 require listed companies to adhere to certain corporate governance standards and provide timely, transparent disclosures to the public and shareholders.

“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.

He also mentioned that there is a possibility of reconsidering the structure for open-market buybacks, which was gradually eliminated last year to enhance transparency and safeguard the interests of minority shareholders.

 

Also Read: FCB Ulka Taps Bhawana Choudhary as Executive Vice President

“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.”

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.

Also Read: Hero MotoCorp Names Harshavardhan Chitale as CEO from 2026

Sebi's goal is to improve the connection between the cash equities and derivatives markets, a goal that regulators around the world have also been working towards in order to promote effective price discovery and decrease settlement pressures.