SEBI is creating a framework to turn India into a global fund management hub, aiming to bring operations back from international centers. The regulator is also reviewing key tools like short-selling and the Securities Lending & Borrowing Mechanism to improve market liquidity. Additionally, SEBI has confirmed the new Closing Auction Session is permanent and warned against any attempts to manipulate it.
The Securities and Exchange Board of India (SEBI) has launched a strategic initiative to position India as a global hub for fund management. Chairman Tuhin Kanta Pandey announced that the regulator is drafting a new framework designed to encourage global fund managers to shift their operational bases to India, rather than relying on traditional international centers like Singapore or Dubai.
This move is part of a larger push to deepen India's financial markets and ensure that the country's growing capital requirements for infrastructure, technology, and green energy are met by domestic financial systems. By simplifying the rules for fund operations, SEBI aims to make it easier for international entities to manage their assets while staying within the Indian regulatory environment.
Alongside this, SEBI is reviewing the Securities Lending & Borrowing Mechanism (SLBM) and short-selling frameworks. These mechanisms allow investors to lend or borrow shares for a fee, which can help increase liquidity—the ease with which assets can be bought and sold without causing major price changes. Improving these tools is intended to make the cash market more efficient.
In the debt market, SEBI is looking at providing more flexibility for International Securities Identification Numbers (ISINs). This change is expected to make corporate bonds easier to identify and trade, thereby boosting activity in the corporate bond sector. There is also a stated intent to provide greater support for ESG (Environmental, Social, and Governance) debt instruments, allowing companies to raise money more easily for sustainable projects.
SEBI also confirmed that the Closing Auction Session (CAS), which was introduced on August 3, 2026, is a permanent feature of the market. While some investors and traders have faced teething issues since its launch, SEBI leadership has emphasized that the session is here to stay. The regulator has issued a strong warning that it will take strict action against any market participants attempting to manipulate this session.
Finally, the regulator is developing guidelines for the responsible use of Artificial Intelligence (AI) and Machine Learning in financial markets. While acknowledging the benefits of AI in areas like fraud detection and customer service, the regulator has highlighted risks such as data bias, potential cybersecurity threats, and accountability gaps. Investors and financial institutions should monitor upcoming guidelines on these technologies, as they may require changes in how financial companies operate and handle investor data.
For investors, the key monitorables will be the draft frameworks for the global fund hub and the specific changes to short-selling rules. Any new regulatory guidelines regarding AI usage could also impact the operational costs and compliance systems for financial services companies listed on the stock exchanges.