The Securities and Exchange Board of India (SEBI) has released a consultation paper proposing a sweeping revamp of the regulatory framework that governs trading activities at stock exchanges. Announced on January 9, 2026, the initiative aims to streamline regulations, remove duplication, and make compliance simpler for brokers, investors, and other market participants. Public feedback has been invited until January 30, 2026.

The proposals are part of SEBI’s ongoing efforts to enhance ease of doing business across equity and commodity derivatives exchanges.

Unified Framework Across Market Segments

SEBI has suggested replacing multiple fragmented circulars with a single consolidated rulebook covering both equity and commodity segments. The unified framework would bring together norms on:

• trading operations and trading hours
• price bands and market-wide circuit breakers
• bulk and block deal reporting
• call auction processes
• liquidity enhancement schemes
• margin trading facility (MTF)
• unique client code (UCC) and PAN requirements
• daily price limits

Rules specific to clearing corporations would be separated into a dedicated master circular to avoid regulatory overlap and improve transparency.

To simplify disclosures, SEBI has proposed merging bulk and block deal reporting and moving reporting from the UCC level to the PAN level. Presentation of circuit breaker norms, IPO price bands, and auction procedures may also be simplified into tabular formats, while outdated operational examples would be removed.

Changes Proposed for Margin Trading Facility

SEBI has recommended rationalising the norms governing margin trading facilities. Key suggestions include:

• increasing the minimum net-worth requirement for brokers from ₹3 crore to ₹5 crore or more
• aligning submission timelines for net-worth certificates and audit reports with financial statements
• eliminating repetitive due-diligence requirements

Obsolete provisions relating to market making in the cash segment would be replaced with a principle-based Liquidity Enhancement Scheme (LES) covering equities, derivatives, and commodities. Exchanges would be allowed greater flexibility in designing incentives and reviewing schemes twice a year.

Certain redundant rules—such as negotiated deal exemptions, outdated debt segment guidelines, forward contract provisions, and unnecessary reporting requirements—are also proposed to be scrapped.

Unified Trading Hours

Trading hours for all segments—including equity, derivatives, commodity, currency, RFQ, EGR, and the Social Stock Exchange—would be consolidated into one comprehensive section for greater clarity and uniformity.

Relaxation of Client Code Modification Rules

SEBI has proposed liberalising Client Code Modification (CCM) norms to:

• allow legitimate error corrections
• permit PAN-linked multiple UCCs for specific client categories
• simplify obligation transfers within FPI family accounts
• increase waiver frequency to once per month
• discontinue quarterly waiver submissions to SEBI

Penalty frameworks between exchanges and clearing corporations would also be harmonised.

Short Selling, SLB and Commodity Disclosures

Provisions relating to short selling and securities lending and borrowing (SLB) would be clarified and integrated into the main framework. Daily disclosures would become mandatory, and the division of responsibilities between exchanges and clearing corporations would be clearly defined.

Commodity market disclosures—such as hedge delivery intentions and open interest details—would be incorporated in the consolidated circular. SEBI has also proposed revising the norms governing UPI-based secondary market transactions with blocked amounts, shifting the settlement aspects to the clearing corporation’s master circular.

Summary

SEBI has proposed an extensive overhaul of trading regulations across stock and commodity exchanges to simplify compliance, remove duplication, and increase transparency. Key elements include a unified regulatory framework, rationalised margin trading rules, streamlined disclosures, liberalised client code modification norms, and consolidation of trading hours. Public comments on the proposals are invited until January 30, 2026.

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