SLBM, short-selling framework under review to deepen cash market, says SEBI Chairman
The Settlement Regulations are undergoing a comprehensive overhaul, and the proposed framework will be rational, less discretionary, simpler and faster, Pandey said.
- Aug 19, 2026,
- Updated Aug 19, 2026 1:34 PM IST
SEBI Chairman Tuhin Kanta Pandey on Wednesday said the Securities Lending and Borrowing Mechanism (SLBM) and short-selling frameworks are under review to deepen the cash market. Speaking at SEBI-FICCI’s 23rd Annual Capital Markets Conference, Pandey said India’s capital markets have transformed and are no longer merely a barometer of economic activity, but an important driver of it.
"They connect household savings with enterprise, global capital with domestic opportunity, and risk capital with new ideas," Pandey said. He added that the next phase of growth must use technology intelligently, widen investment opportunities, deepen financing channels and make regulation more future-ready.
On widening investment frontiers, Pandey said SEBI is consulting under the proposed framework for Portfolio Managers on permitting client funds to be invested in foreign securities, introducing a Mutual Fund-only PMS for mass-affluent investors, and creating a framework to support global fund-management activity from India. He said the Accredited Investor framework is also under review to simplify accreditation and widen the pool of sophisticated investors.
On easing the flow of capital in both directions, he said SEBI has proposed simpler digital onboarding for Persons Resident Outside India without requiring physical presence in India. Wider FPI participation in non-agricultural commodity derivatives is also being considered, with safeguards. He added that the issuance of Depository Receipts against units of REITs and publicly listed InvITs has been proposed to widen access to foreign capital.
Pandey said markets that finance growth must also be deepened. Along with the review of the SLBM and short-selling frameworks, proposals in debt markets include greater ISIN flexibility, support for ESG debt and exploration of corporate-bond tokenisation. He said the proposed Credit Risk-o-Meter is intended to help retail investors grasp debt risk more easily. For REITs and InvITs, SEBI is examining greater flexibility for investment in under-construction projects within prudential limits.
On technology, Pandey said it must strengthen both market infrastructure and regulatory oversight. SEBI is examining an IT Resilience Index for MIIs to provide an objective framework for assessing the resilience of critical systems, and is also working with MIIs to expand API-based connectivity and interoperability. He said guidelines for the responsible use of AI/ML in the markets will be issued shortly, with a tiered approach focused on clear accountability and governance controls. The framework, he said, will require Kill Switch and Humans in the Loop controls, along with data controls, with the aim of balancing innovation and investor protection.
Pandey said the rulebook must also keep pace. The Settlement Regulations are undergoing a comprehensive overhaul, and the proposed framework will be rational, less discretionary, simpler and faster. He said the LODR and delisting frameworks are also under review. SEBI is reviewing the SME IPO framework to make capital raising easier for genuine SMEs while maintaining investor protection and market integrity. He added that the proposed Common Advertisement Code will lay down common standards of fairness, disclosure and accountability for regulated entities in the age of social media and digital distribution.
SEBI Chairman Tuhin Kanta Pandey on Wednesday said the Securities Lending and Borrowing Mechanism (SLBM) and short-selling frameworks are under review to deepen the cash market. Speaking at SEBI-FICCI’s 23rd Annual Capital Markets Conference, Pandey said India’s capital markets have transformed and are no longer merely a barometer of economic activity, but an important driver of it.
"They connect household savings with enterprise, global capital with domestic opportunity, and risk capital with new ideas," Pandey said. He added that the next phase of growth must use technology intelligently, widen investment opportunities, deepen financing channels and make regulation more future-ready.
On widening investment frontiers, Pandey said SEBI is consulting under the proposed framework for Portfolio Managers on permitting client funds to be invested in foreign securities, introducing a Mutual Fund-only PMS for mass-affluent investors, and creating a framework to support global fund-management activity from India. He said the Accredited Investor framework is also under review to simplify accreditation and widen the pool of sophisticated investors.
On easing the flow of capital in both directions, he said SEBI has proposed simpler digital onboarding for Persons Resident Outside India without requiring physical presence in India. Wider FPI participation in non-agricultural commodity derivatives is also being considered, with safeguards. He added that the issuance of Depository Receipts against units of REITs and publicly listed InvITs has been proposed to widen access to foreign capital.
Pandey said markets that finance growth must also be deepened. Along with the review of the SLBM and short-selling frameworks, proposals in debt markets include greater ISIN flexibility, support for ESG debt and exploration of corporate-bond tokenisation. He said the proposed Credit Risk-o-Meter is intended to help retail investors grasp debt risk more easily. For REITs and InvITs, SEBI is examining greater flexibility for investment in under-construction projects within prudential limits.
On technology, Pandey said it must strengthen both market infrastructure and regulatory oversight. SEBI is examining an IT Resilience Index for MIIs to provide an objective framework for assessing the resilience of critical systems, and is also working with MIIs to expand API-based connectivity and interoperability. He said guidelines for the responsible use of AI/ML in the markets will be issued shortly, with a tiered approach focused on clear accountability and governance controls. The framework, he said, will require Kill Switch and Humans in the Loop controls, along with data controls, with the aim of balancing innovation and investor protection.
Pandey said the rulebook must also keep pace. The Settlement Regulations are undergoing a comprehensive overhaul, and the proposed framework will be rational, less discretionary, simpler and faster. He said the LODR and delisting frameworks are also under review. SEBI is reviewing the SME IPO framework to make capital raising easier for genuine SMEs while maintaining investor protection and market integrity. He added that the proposed Common Advertisement Code will lay down common standards of fairness, disclosure and accountability for regulated entities in the age of social media and digital distribution.