SDG 9: Industry, Innovation and Infrastructure | SDG 16: Peace, Justice and Strong Institutions | SDG 8: Decent Work and Economic Growth
Institutions: Securities and Exchange Board of India (SEBI) | Ministry of Finance
The SEBI Chairman’s address at the CNBC-TV18 Global Leadership Summit in November 2025 outlined an aggressive regulatory agenda aimed at market modernization and investor protection, essential for realizing the ‘Viksit Bharat’ vision.
Key Market Modernization Initiatives
Review of Core Frameworks: SEBI will soon establish a working group to undertake a comprehensive review of the Short Selling (unchanged since 2007) and Securities Lending and Borrowing Mechanism (SLBM) frameworks. The SLBM remains significantly underdeveloped compared to global jurisdictions.
Corporate Governance Review: An in-depth review of the Listing Obligations and Disclosure Requirements (LODR) 2015 and Settlement Regulations will also be taken up soon to strengthen corporate governance and transparency among listed firms.
Derivatives Approach: The approach to the Futures and Options (F&O) segment will remain calibrated and data-based, adhering to a consultative approach for any future decisions, with the current system (including weekly expiries) working.
Investor Protection and Market Growth
Action Against Finfluencers: The regulator is prepared to “strike back forcefully” against unregulated “finfluencers” who pose a “direct risk” to investors, noting that 62% of investors make decisions based on their recommendations. SEBI is actively flagging and managing the takedown of over 1 lakh (100,000) instances of misleading social media content.
Cyber Safety: Safeguarding sensitive client data and market infrastructure from cyber threats is a “foremost concern”.
Market Growth Goal: The unique investor base has rapidly grown to over 135 million, but penetration remains low. SEBI aims to double the current base of 130 million unique investors within five years, promoting inclusivity for women and investors beyond the top 30 cities.
The mandate to modernize the SLB and Short Selling frameworks is crucial for deepening market liquidity and efficiency, while the aggressive stance on finfluencers and cyber safety is vital for preserving investor trust in a rapidly digitizing environment. These actions are fundamental steps toward realizing the market’s role as a key pillar of growth for the Indian economy.
What is the Securities Lending and Borrowing Mechanism (SLBM)? The SLBM allows investors who hold idle shares in their demat accounts to temporarily lend them to other market participants for a fee. This lets the lender earn extra income on otherwise inactive investments. Borrowers, on the other hand, use the borrowed shares mainly for short selling—selling shares they don’t own in anticipation of buying them back later at a lower price—or to smooth trade settlements by quickly obtaining shares needed to fulfill delivery obligations. Overall, the SLBM enhances market liquidity, improves settlement efficiency, and supports fair price discovery in the stock market.
Relevant Question for Policy Stakeholders: What specific global benchmarks will the SEBI working group adopt for the short selling and SLB frameworks to align India’s markets with international standards while safeguarding against market volatility?
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