SEBI's Market Overhaul: How New F&O, Short-Selling Rules Will Boost Liquidity

Speaking at the CNBC-TV18 Global Leadership Summit 2025, Pandey said India's economy continues to demonstrate "remarkable growth and resilience," asserting that "capital markets are not just a barometer of the economy, but central to the aspirations of Viksit Bharat."

Pandey noted that India's primary markets remain robust, with nearly Rs 2 lakh crore raised from public issues this year alone. He said SEBI will continue to streamline the capital-raising process, making markets faster, more transparent, and more inclusive.

"India's domestic capital base is a deep well waiting to be deployed," Pandey said, pointing to the rising contribution of household savings and institutional participation in driving market liquidity and resilience.

On the derivatives front, the SEBI chief said the regulator will soon unveil a new options framework, aligned with global standards but tailored to India's needs.

"Derivatives play a vital role in price discovery," he noted, adding that SEBI's approach to futures and options (F&O) would remain calibrated and data-based. A discussion paper on this front will be released shortly.

Pandey said the introduction of weekly F&O settlements has brought greater certainty to market participants and will continue under regulatory watch.

Acknowledging the need to strengthen market depth, Pandey said SEBI will conduct a comprehensive review of India's short-selling and Securities Lending and Borrowing Mechanism (SLBM) frameworks, which remain underdeveloped compared with other markets.

He also said the regulator would review buyback norms to ensure greater transparency and bolster investor confidence.

Describing mutual funds as a "huge untapped lever," Pandey said their assets under management (AUM) remain below 25 percent of GDP, far lower than global averages.

While awareness of mutual funds has grown, actual participation still lags, especially in rural areas. "Urban participation in securities markets stands at 15 percent, compared with just 6 percent in rural India," he said.

Addressing the issue of regulatory costs, Pandey said SEBI seeks "optimum regulation", neither too tight nor too loose, to keep India's markets "future-ready."

"The cap is a cap - it's a ceiling. We are discussing whether that ceiling is too low. But transparency in costs remains non-negotiable," he said.

Pandey also underscored the importance of further deepening India's bond market and strengthening corporate governance. SEBI, he added, will soon review the Listing Obligations and Disclosure Requirements (LODR) framework to enhance transparency among listed firms.

"With reform and resilience as our guiding principles, India's markets are well-positioned to fund the country's ambitions," Pandey concluded.

- ANI