SEBI's Game-Changer: Faster Registration, Cheaper Trading & Eased Short-Selling for Foreign Investors!

SEBI/Exchange

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Updated on 13 Nov 2025, 11:46 am

Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey has outlined a strategic vision to bolster foreign investor confidence and participation in India's financial markets. In an exclusive interview, Pandey emphasized the need to streamline the investor registration process, aiming to reduce it from weeks to just a few days, calling the current duration unacceptable.

Further enhancing market accessibility, SEBI is reviewing regulations to decrease the cost of trading within the cash equities market. This includes examining margin requirements to encourage greater liquidity. The regulator is also focusing on improving the shallow short-selling and securities lending markets, considering mechanisms like 'netting' to reduce capital requirements for traders.

These initiatives are particularly timely, given that foreign investors have withdrawn nearly $17 billion from Indian equities this year. SEBI is also exercising caution regarding the derivatives market, noting 'irrational exuberance' and planning to assess the impact of existing rule changes before introducing new product suitability measures.

Impact: These reforms are poised to significantly attract foreign portfolio investment (FPI) inflows, inject much-needed liquidity, and deepen the Indian stock market. They address key concerns raised by foreign participants, potentially leading to increased market depth and improved valuations. Rating: 8/10

Difficult Terms: - Foreign Investors: Individuals or institutions from countries other than India investing in Indian financial assets. - Cash Equities Market: The market where stocks are traded for immediate delivery and payment. - Short-Selling: Selling borrowed securities with the expectation that the price will fall, allowing the investor to buy them back later at a lower price. - Margins: Funds required by brokers from traders to cover potential losses on leveraged positions. - Derivatives Market: Markets where financial contracts (like futures and options) derive their value from an underlying asset. - Product Suitability: Rules ensuring that financial products match an investor's risk profile and objectives. - Netting: A process of offsetting buy and sell transactions to determine a net amount payable or receivable, reducing capital requirements. - T+1 Settlement: A system where trades are settled one business day after the transaction date.