Capital markets regulator Sebi has proposed a wide-ranging revamp of exchange-traded derivatives regulations aimed at simplifying compliance norms, removing redundant provisions and easing operational requirements for stock exchanges and clearing corporations.

In a consultation paper released on May 14, the regulator proposed multiple changes across equity, currency, commodity and interest rate derivatives segments as part of a broader “ease of doing business” initiative for market infrastructure institutions.

Sebi said the review seeks to simplify regulatory requirements, discontinue duplication and reduce the compliance burden on exchanges by restructuring and consolidating existing master circulars governing derivatives markets.

One of the key proposals is the removal of the “Close to the Money” (CTM) option series mechanism in commodity derivatives. The regulator said the CTM framework makes the exercise mechanism complex for market participants and creates uncertainty for option sellers.

Sebi noted that leading global commodity exchanges do not follow the CTM concept and that simpler in-the-money and out-of-the-money structures are easier for traders to understand and execute.

The regulator has also proposed reducing the mandatory number of Product Advisory Committee meetings for non-agricultural commodity derivatives from two meetings annually to one meeting per year, aligning them with agricultural commodity norms.

According to the consultation paper, exchanges argued that non-agricultural commodity contracts generally require fewer specification changes and that attendance in such meetings has often remained weak for low-liquidity contracts.Sebi further proposed granting exchanges greater operational flexibility in advancing expiry dates of commodity contracts during sudden disruptions such as strikes, erratic weather or unexpected market closures. Under the proposed framework, exchanges would be allowed to take such decisions with approval from the managing director and provide “adequate notice” instead of the existing mandatory 10-day advance intimation rule.

Another proposal relates to position limit monitoring in derivatives markets. Sebi clarified that exchanges would continue to remain responsible for monitoring position limits but may outsource the operational work to clearing corporations through formal agreements defining roles and responsibilities.

The regulator also proposed discontinuing several outdated requirements, including lower base minimum capital norms for brokers without nationwide terminals, noting that regional stock exchanges have largely ceased operations and internet-based trading has become standard.

Similarly, Sebi proposed removing separate certification guidelines for derivatives dealers and brokers because these are already covered under the Sebi certification regulations for associated persons in securities markets.

In another move toward digitisation, the regulator proposed replacing newspaper disclosures of derivatives transactions with website-based disclosures by exchanges.

The consultation paper also proposes merging multiple derivatives-related circulars and chapters into consolidated frameworks for equity derivatives, currency derivatives and interest rate derivatives to reduce overlap and improve consistency.

Sebi has also suggested separating regulatory provisions applicable to stock exchanges and clearing corporations into distinct master circulars, reflecting increasingly segregated operational roles after interoperability and independent clearing member registration frameworks.

The regulator has invited public comments on the proposals until June 4.

Market regulator Securities and Exchange Board of India (Sebi) on Tuesday introduced a new framework aimed at simplifying compliance and enhancing transparency in the handling of pledged shares under capital market regulations. In a circular issued to stock exchanges, depositories, and merchant bankers, the regulator said that securities where a traditional lock-in cannot be enforced will now be marked as “non-transferable” for the duration of the lock-in period.

This move follows amendments made on March 21 to the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018.

To operationalise the mechanism, depositories have rolled out a detailed framework requiring issuers to incorporate relevant provisions in their Articles of Association, notify lenders or pledgees, and ensure adequate disclosures in offer documents.

Sebi noted that depositories have already upgraded their systems to support the revised process. Market infrastructure institutions and issuers have been directed to ensure full compliance with the new mechanism.

The move is part of Sebi’s broader push to improve ease of doing business while safeguarding investor interests and strengthening market discipline.

With this move, the Indian capital markets regulator has plugged a key gap in IPO rules by enabling a new mechanism to enforce lock-in on pledged shares. There has been a long-standing demand to rectify this issue.

The move comes following a Sebi relief on Monday to companies planning to tap the capital markets by granting a one-time extension for the validity of its observation letters, citing challenging market conditions due to ongoing geopolitical tensions in the Middle East.Under existing norms, companies are required to launch their public issues within 12 to 18 months from the date of receiving SEBI’s observations. However, the regulator noted that issuers are facing difficulties in mobilising funds and accessing capital markets amid subdued investor participation and heightened uncertainty.

Following representations from industry bodies, SEBI has decided to extend the validity of observation letters that are set to expire between April 1, 2026 and September 30, 2026. These will now remain valid until September 30, 2026, giving companies additional time to proceed with their fundraising plans.

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Market regulator Securities and Exchange Board of India (Sebi) has announced a one-time relaxation for listed companies struggling to meet Minimum Public Shareholding (MPS) norms, citing challenging market conditions driven by ongoing geopolitical tensions in the Middle East.

Sebi’s relief comes following representations from industry bodies highlighting the difficulties in achieving compliance amid volatile markets. The regulator has decided to ease these provisions temporarily.

The relaxation takes effect immediately, with stock exchanges instructed to notify listed entities and make necessary amendments to their rules and regulations to implement the directive.

Under existing rules, companies that fail to comply with MPS requirements face penal actions such as fines, freezing of promoter shareholding and other restrictions as outlined in Sebi’s master circular on listing obligations.

Sebi said that listed entities whose deadlines for meeting MPS norms fall between April 1, 2026 and September 30, 2026 will be exempt from penal actions during this period. Stock exchanges and depositories have been directed not to initiate any punitive measures against such companies. Additionally, any penalties already imposed for non-compliance during this window will be withdrawn.

The move comes as heightened uncertainty and subdued investor participation have made it difficult for companies to dilute promoter holdings and raise public shareholding to mandated levels.

Earlier today, Sebi provided relief to companies planning to tap the capital markets by granting a one-time extension for the validity of its observation letters, citing challenging market conditions due to ongoing geopolitical tensions in the Middle East.Under existing norms, companies are required to launch their public issues within 12 to 18 months from the date of receiving SEBI’s observations. However, the regulator noted that issuers are facing difficulties in mobilising funds and accessing capital markets amid subdued investor participation and heightened uncertainty.

Read more: Sebi grants one-time extension for IPO observation validity amid geopolitical volatility

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Sebi has allowed investment advisers and research analysts to use liquid mutual funds and overnight mutual funds for meeting their mandatory deposit requirements, providing an alternative to scheduled bank deposits.

Overnight mutual funds are a type of debt mutual fund that invests in overnight securities — debt instruments with a maturity of just one day.

Currently, Investment Advisers (IAs) and Research Analysts (RAs) are mandated to maintain a specified deposit with a scheduled bank, marked as a lien in favour of the Investment Adviser Administration and Supervisory Body (IAASB) or the Research Analyst Administration and Supervisory Body (RAASB), as applicable.

Based on the representations from industry participants and feedback received during public consultations, Sebi’s board approved the proposal in its June 2025 meeting. The amendments to the Research Analysts rules and Investment Advisers norms were notified by the regulator on August 6-7, respectively.

According to the circular issued on Tuesday, Sebi said, “In order to ensure compliance with the deposit requirements under the norms, IAs and RAs will now maintain a deposit in the form of units of a liquid mutual fund or an overnight mutual fund or as a deposit maintained with a scheduled bank.”

Such a deposit will be marked as a lien in favour of IAASB or RAASB, as the case may be, it added. The investment advisers and research analysts are required to comply with the revised norms by September 30.

Leading stock exchange BSE, which functions as both IAASB and RAASB, has been directed to implement necessary systems and procedures for the implementation of the provisions of the new framework and bring the same to the notice of registered entities.

Market regulator Securities and Exchange Board of India (Sebi) has prohibited merchant banker First Overseas Capital Ltd (FOCL) from managing any public issue until further orders after finding the company in violation of Sebi’s merchant banking norms.

The capital market watchdog has also issued a show cause notice to FOCL seeking its response on why an enquiry should not be initiated against the company and penalty be not imposed on it.

“Keeping in view the prima facie observations and findings recorded in the preceding paragraphs and in order to protect the integrity of the securities market, I, in exercise of the powers conferred upon me under Sections 11, 11(4) and 11B(1) read with Section 19 of the SEBI Act, 1992, pending adjudication of the allegations against the Noticee detailed in this Order, hereby debar the Noticee from taking any new mandate in relation to the business of issue management either by making arrangements regarding selling, buying or subscribing to securities or acting as manager, consultant, adviser or rendering corporate advisory service in relation to such issue management, until further order,” Sebi ruled in its 33-page order.

The regulator in its prima facie observations found that FOCL had violated various regulations including not maintaining the minimum net worth requirement for six consecutive years from the year 2018-19, knowingly submitted false and misleading statement to Sebi, and had ventured into business other than the that in the securities market and not disclosing its track record in according with the Sebi circular.

On the issue of false and misleading information, the regulator noted at least half-a-dozen cases which included its submissions of the availability of the statutory auditor, loan vis-à-vis investment in property development business, misleading information regarding the Compliance Officer and company’s net worth of for FYs 2021-22 and 2022-23.

FOCL was also found in non-compliance with MB certification requirements. “A merchant banker is required to ensure that at least two KMPs have certification from NISM for “NISM-Series-IX: Merchant Banking Certification Examination”. However, it was found that none of the KMPs had the requisite certification between April 01, 2022 (beginning of the inspection period) and August 05, 2023 and only one KMP had the certification thereafter,” the 33-page order said.FOCL has been given 21 days time to file its reply/objections.The interim order was pronounced by Ashwani Bhatia, a Whole Time Member in Sebi.

Also Read: F&O cannot be a national pastime, says Sebi member Ashwani Bhatia

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Aimed at promoting ease of doing business for non-convertible securities, market regulator Securities and Exchange Board of India (Sebi) on Friday released a consultation paper seeking feedback on proposals, including alignment of provision regarding approval and authentication of financial results for entities having listed non-convertible securities with that for equity listed entities.

Under the proposed norms, the quarterly financial results submitted shall be approved by the board of directors. Further, the financial results submitted to the stock exchange shall be signed by the chairperson or managing director, or a whole-time director. In the absence of all of them, it should be signed by any other director of the listed entity who is duly authorised by the board of directors to sign the financial results.

Under the current regulation, listed non-convertible securities requires quarterly results to be taken on record by the board of directors and to be signed by the managing director/ executive director. Regulations applying to entities with listed specified securities require the quarterly financial results to be approved by the board of directors and signed by the chairperson or managing director, or a whole-time director or in the absence of all of them, by any other director duly authorized by the board of directors.

The move comes following the announcement made by Finance Minister Nirmala Sitharaman in the Budget of FY2023-24 calling for simplifying, easing and reducing cost of compliance for participants in the financial sector.

Sebi constituted various working groups to recommend measures to simplify and ease compliances under various SEBI regulations.Among other things, a proposal has been made to align provision regarding disclosure of fraud/default in respect of price sensitive information for entities having listed non-convertible securities with that of equity listed entities.The committee members had recommended a common definition of ‘fraud’ for equity and debt listed entities.The consultation paper also proposes reduction in timeline for intimation of record date to stock exchanges by entities having listed non-convertible securities to ‘atleast three working days’ from ‘atleast seven working days’.

Filing of all disclosures by listed entities having listed non-convertible securities with stock exchanges is proposed to be done in XBRL format in line with provision specified for equity listed entities.

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MUMBAI: The Securities and Exchange Board of India (Sebi) has proposed that certain changes in private placement memorandum (PPM) of alternative investment funds (AIFs) can be submitted directly to it rather than through a merchant banker. The move is aimed to rationalise cost of compliance for AIFs and also facilitate ease of doing business.

At present, AIFs have to intimate any change in the terms of PPM through a merchant banker to Sebi, along with a due diligence certificate from them. It has to be done on a consolidated basis within one month of the end of each financial year.

Further, the regulator has proposed to exempt large value fund (LVF) for accredited investors from the requirement of intimating any changes in the terms of PPM through a merchant banker.

LVFs may directly file any changes in the terms of PPM with SEBI, along with a duly signed and stamped undertaking by CEO of the manager of the AIF and compliance officer of manager of the AIF,” Sebi said in a discussion paper.