SEBI Proposes Simplified Trading Rules for Exchanges

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AuthorIshaan Verma|Published at:
SEBI Proposes Simplified Trading Rules for Exchanges
Overview

India's market regulator, SEBI, has unveiled proposals to overhaul the trading framework across stock and commodity exchanges. The initiative aims to consolidate complex rules, eliminate redundancies, and significantly reduce the compliance burden for market participants, fostering greater ease of doing business. Public feedback is being sought until January 30.

SEBI Overhauls Trading Framework

Markets regulator SEBI introduced sweeping proposals on Friday to simplify the trading-related framework at stock and commodity exchanges. The move is part of a broader effort to streamline operations and ease the compliance burden for all market participants.

Unified Rules Proposed

The consultation paper suggests consolidating numerous overlapping provisions into a single, cohesive framework. This includes rules on trading, price bands, circuit breakers, bulk and block deal disclosures, call auctions, liquidity enhancement schemes, margin trading, client codes, and trading hours. The aim is to create a consistent set of regulations applicable across both equity and commodity segments, while distinct provisions for clearing corporations will be moved to a dedicated master circular.

Enhanced Transparency and Broker Norms

To bolster transparency, SEBI proposes merging bulk and block deal disclosures and shifting dissemination to the client PAN level, reducing manual reporting for brokers. Market-wide circuit breaker rules and IPO price bands will be presented in a tabular format. Brokerage firms will see rationalized margin trading norms, with minimum net worth requirements potentially rising from ₹3 crore to ₹5 crore or higher, as determined by exchanges.

Greater Exchange Flexibility

Exchanges will gain more flexibility in designing liquidity enhancement schemes, conducting board reviews, and offering incentives. Obsolete market-making provisions will be removed. Outdated regulations concerning negotiated deals and debt segments are also slated for scrapping, alongside consolidating trading hours for all market segments into one section.

Client Code and Penalties

Client Code Modification rules are set to be liberalized, permitting genuine corrections and allowing PAN-linked multiple client codes for specific categories. Penalties will be harmonized between exchanges and clearing corporations. Short-selling and securities lending/borrowing provisions will be clarified and integrated into the main framework.

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