Securities and Exchange Board of India (Sebi) Chairman Tuhin Kanta Pandey on Friday outlined a broad roadmap to further deepen the domestic capital markets — this includes a review of the short-selling and securities lending and borrowing (SLB) framework, introduction of bond index derivatives, and issuance of fresh guidelines on the use of artificial intelligence (AI).
Speaking at the ET Now Market Summit, Pandey said the regulator’s focus would be on lowering market friction, deepening market participation and ensuring responsible growth amid heightened global volatility.
As part of efforts to deepen cash markets, Sebi is comprehensively reviewing the SLB and short-selling framework to strengthen the linkage between cash and derivatives markets and improve liquidity.
“We will also be looking to bring in, along with RBI, derivatives on bond indices,” Pandey said.
The market regulator is also examining ways to expand the equity derivatives market through longer-tenure futures and options contracts. In commodity derivatives, Sebi is considering measures such as extending early pay-in benefits to options contracts, a phased shift towards physical settlement in select agricultural commodities and a review of position limits.
AI will form an important part of Sebi’s regulatory agenda, Pandey said, adding that the regulator will issue detailed guidelines on the responsible use of AI in capital markets. The framework will seek to balance the benefits of AI in surveillance, fraud detection and investor servicing with risks related to transparency, bias, cybersecurity and accountability.
Pandey said Sebi was reviewing the Innovators Growth Platform to improve access to capital for companies operating in strategic sectors such as AI, semiconductors, clean energy, biotechnology, advanced materials and defence technology.
In debt markets, the regulator is working on a market-making framework for corporate bonds, measures to deepen the municipal bond market and the tokenisation of corporate bonds.
The Sebi chief also indicated that regulations governing municipal debt securities and portfolio management services (PMS) are under review. In addition, the regulator plans a further review of the delisting framework and is examining changes to the listing obligations and disclosure requirements (LODR) regulations to make them more responsive to evolving governance and disclosure needs.
On foreign portfolio investment, Pandey said Sebi would continue to simplify market access through easier know-your-customer (KYC) requirements and a risk-based review of disclosure norms. The regulator will also work with other authorities to streamline KYC processes for non-resident Indians (NRIs).
