Short selling: SEBI clarifies, says no changes made to existing framework

Market regulator SEBI in a press release clarified that no changes have been made to its short selling framework, and that reports of any changes are false. SEBI said it has come across a media article incorrectly reporting about changes in short selling framework, which would become applicable from December 22, 2025.

"In this context SEBI expressly clarifies that there is no change in the existing regulatory framework for short selling. The question of any change in this framework from tomorrow, as reported incorrectly by the media story, therefore, does not arise," it said on December 21.

SEBI clarification came as a report earlier suggested SEBI has banned selling in non-F&O shares from December 22.

As per SEBI, short selling is defined as selling of a stock, which the seller does not own  at the time of trade.  All  classes  of  investors including retail and institutional  investors are permitted  to short sell. That said, naked short selling is not permitted  and investors are required to mandatorily honor their obligation of delivering the securities at the time of settlement. 

Institutional investors are required to disclose upfront at the time of placement of order whether the transaction is a short sale. Retail investors are permitted to make a similar disclosure by the end of the trading hours on the transaction day.

The brokers are mandated to collect the details on scrip-wise  short sell positions, collate  the  data  and  upload  it  to the stock exchanges before the commencement of trading on the following trading day, as per SEBI.

 The stock changes then consolidate such information and disseminate the same on their websites for the information of the public on a weekly basis.