MARKETS regulator SEBI on Friday proposed an overhaul of the trading-related framework at stock exchanges, aimed at simplifying rules, removing duplication, and reducing the compliance burden for market participants. The proposals are part of SEBI’s broader push to facilitate ease of doing business across stock exchanges, including commodity derivatives exchanges. In its consultation paper, SEBI suggested merging multiple overlapping provisions on trading, price bands, circuit breakers, bulk and block deal disclosures, call auction mechanisms, liquidity enhancement schemes, margin trading facility (MTF), unique client code (UCC), PAN requirements, trading hours and daily price limits into a single, consolidated framework applicable to both equity and commodity segments. Provisions specifically applicable to clearing corporations should be carved out and moved into a dedicated master circular to avoid regulatory overlap, SEBI suggested.

 

To improve transparency, SEBI proposed merging bulk and block deal disclosures and shifting dissemination to the client PAN level instead of the UCC level, thereby reducing manual reporting requirements for brokers. The regulator has suggested that market-wide circuit breaker rules, dynamic price band flexing, IPO price bands, and call auction procedures should be presented in tabular form, while several duplicative or outdated operational examples should be removed. The regulator has also proposed rationalising

 

MTF norms, including raising the minimum net worth requirement for brokers from Rs 3 crore to Rs 5 crore or higher, as specified by exchanges. Timelines for submitting net-worth and auditor certificates should align with financial reporting cycles, and redundant due diligence clauses should be deleted. Obsolete market-making provisions for the cash segment should be removed and merged into a principle-based Liquidity Enhancement Scheme (LES) framework that now uniformly covers equities, derivatives, and commodities.

 

Under the revised framework, exchanges will have greater flexibility in designing schemes, conducting half-yearly board reviews and offering incentives, with higher caps for new exchanges or new segments, SEBI proposed. Several outdated provisions, including negotiated-deal exemptions, guidelines for a dedicated debt segment, forward contracts in commodities, MOU-based trading, and unnecessary reporting requirements, have been proposed for scrapping. Trading hours across all segments, including equity, derivatives, commodities, currency, RFQ, EGR, and the Social Stock Exchange, will be consolidated into a single section.

 

Client Code Modification rules will be liberalised to permit genuine corrections, allow PAN-linked multiple UCCs for specified client categories, facilitate easier obligation transfer among FPI family accounts, increase waiver frequency to once a month and discontinue quarterly waiver reporting to Sebi. Penalties will also be harmonised between exchanges and clearing corporations. Short-selling and securities lending and borrowing (SLB) provisions will be clarified and incorporated into the main framework, with daily disclosures mandated and responsibilities of exchanges and CCs clearly demarcated. Commodity-specific disclosures, such as hedger delivery intent, open interest data, and risk disclosures by listed entities, will also form part of the unified circular. The SEBI further proposes updating provisions on UPI-based trading with blocked amounts in the secondary market, while shifting settlement-related aspects to the CC master circular. SEBI has invited public comments on the proposals till January 30.