Key Details
SEBI’s future reform agenda is organized around three strategic priorities: reducing operational friction, expanding market depth, and ensuring responsible growth in an increasingly technology-driven financial ecosystem.
Strategic Track | Key Measures |
|---|---|
Track 1: Lower Friction | Review of LODR and delisting regulations; simplified digital KYC under the SWAGAT framework; enhanced training for independent directors on AI, cybersecurity and ESG risks. |
Track 2: Deeper Markets | Reforms to securities lending and short-selling rules; introduction of longer-tenure derivatives; launch of bond index derivatives with RBI; corporate bond market-making; municipal bond development; debt tokenization; easier capital access for deep-tech firms through IGP reforms. |
Track 3: Responsible Growth | Expansion of Project Jagrook; investor protection initiatives; AI governance guidelines aligned with IOSCO standards; Human-In-The-Loop regulatory oversight for market surveillance and enforcement. |
Market Snapshot: Current State of India’s Capital Markets
Market Snapshot | Status |
|---|---|
Capital Raised (Apr–May 2026) | ₹1.56 lakh crore |
SIP Share of MF Assets | 21% |
Settlement Cycle | T+1 |
IPO Listing Timeline | T+3 |
Summary
Building Capital Markets as Shock Absorbers in an Uncertain Global Environment
Addressing the ET NOW Market Summit in Mumbai, SEBI Chairman Shri Tuhin Kanta Pandey outlined a forward-looking vision for India’s capital markets amid a period of heightened global uncertainty. Referring to the increasing frequency of geopolitical disruptions, supply-chain shocks, and volatile international capital flows, he argued that India’s financial markets must function as resilient “shock absorbers” capable of supporting economic growth without resorting to restrictive interventions.
The Chairman highlighted the growing strength of domestic capital formation. During April–May 2026, Indian companies mobilized more than ₹1.56 lakh crore, including approximately ₹70,000 crore through equity issuancesand ₹86,000 crore through debt markets. At the same time, domestic participation continues to deepen, with SIP assets accounting for 21 percent of mutual fund industry assets, providing a stable counterweight to fluctuations in foreign portfolio investment.
The Future Road Map: Three Strategic Tracks
The core of the Chairman's 2026 agenda focuses on a three-track road map to guide India's investment markets:
Track 1: Lower Friction and Easier Market Access
The first pillar of SEBI’s roadmap focuses on reducing operational and compliance frictions across the market ecosystem. The regulator is reviewing the Listing Obligations and Disclosure Requirements (LODR) framework and existing delisting regulations to simplify compliance requirements while preserving transparency standards.
SEBI also plans to streamline onboarding processes for overseas investors through digital KYC mechanisms under the SWAGAT framework, reducing procedural costs for NRIs and Foreign Portfolio Investors (FPIs). Recognizing the changing risk landscape, the regulator intends to strengthen training for independent directors in areas such as artificial intelligence, cybersecurity, ESG disclosures, and technology governance.
Track 2: Deepening Equity and Debt Markets
The second reform pillar seeks to broaden the range of financing instruments and improve market liquidity. SEBI plans to update the Securities Lending and Borrowing (SLB) framework and short-selling regulations to improve price discovery and strengthen the link between cash and derivatives markets.
Several initiatives are also targeted at the debt market. In collaboration with the RBI, SEBI is working towards the introduction of bond index derivatives, while simultaneously promoting corporate bond market-making mechanisms, strengthening municipal bond markets, and advancing the tokenization of corporate debt instruments.
The Chairman also indicated that the Innovators Growth Platform (IGP) would be revisited to make public markets more accessible for strategic sectors such as semiconductors, clean energy, defence technologies, and space-tech ventures, thereby expanding long-term financing options for deep-tech firms.
Track 3: Responsible Growth in an AI-Enabled Financial System
The third pillar emphasizes investor protection, governance, and responsible technology adoption. Through Project Jagrook, SEBI intends to scale financial literacy and investor-awareness efforts across regions and languages to reduce speculative behaviour and strengthen informed participation.
A major component of this agenda is the development of an AI governance framework for capital markets. While artificial intelligence will increasingly be used for surveillance, fraud detection, and risk assessment, SEBI has emphasized a Human-In-The-Loop (HITL) model under which sensitive enforcement decisions remain subject to accountable human review.
The regulator also intends to draw upon emerging international standards developed by IOSCO to address issues such as algorithmic bias, transparency, and the responsible deployment of AI systems in financial markets.
What is a “Human-In-The-Loop” (HITL) Architecture in Market Regulation?
A Human-In-The-Loop (HITL) architecture is a governance framework in which artificial intelligence systems assist regulators by identifying suspicious patterns, monitoring market activity, and generating risk alerts, while final regulatory decisions remain under direct human supervision. Rather than allowing algorithms to autonomously impose penalties or initiate enforcement actions, the system combines computational speed with human judgment and accountability. In financial regulation, HITL models are increasingly viewed as essential for balancing technological efficiency with due process, transparency, and market stability.
Policy Relevance
The roadmap outlined by SEBI signals a shift from incremental regulatory adjustments toward a broader strategy focused on market depth, technological modernization, and investor trust. The reforms seek to strengthen India’s ability to mobilize domestic capital, finance emerging industries, and maintain financial stability amid global volatility.
Protects Long-Term Capital Formation from External Volatility: The continued expansion of domestic SIP participation provides a stable funding base that can partially offset sudden shifts in foreign portfolio flows.
Expands Financing Pathways for Strategic Industries: Reforms to the Innovators Growth Platform can improve capital access for deep-tech sectors such as semiconductors, clean energy, defence manufacturing, and space technologies.
Deepens India’s Debt Market Ecosystem: Bond index derivatives, market-making frameworks, and debt tokenization initiatives can improve liquidity and broaden financing options for both public and private infrastructure projects.
Strengthens Corporate Governance for Emerging Risks: Enhanced director training and regulatory modernization can improve preparedness for cybersecurity threats, AI-related risks, and evolving ESG obligations.
Promotes Responsible Adoption of Financial Technologies: The integration of AI governance standards and Human-In-The-Loop oversight seeks to harness technological efficiencies while preserving investor protection and regulatory accountability.
Relevant Question for Stakeholders: Which of SEBI’s three reform tracks—lower friction, deeper markets, or responsible growth—is likely to have the greatest impact on India’s capital markets over the next decade, and what institutional changes would be required to realize its full potential?
Follow the Full News Here: Keynote Address by Chairman Tuhin Kanta Pandey at the ET NOW Market Summit — Building Resilient, Transparent, and Trusted Capital Markets