SEBI has proposed to simplify trading-related infrastructure in stock exchanges

Market regulator Sebi on Friday proposed an overhaul of the trading-related framework at stock exchanges, aimed at simplifying rules, eliminating duplication and reducing compliance burdens for market participants.

The proposals are part of SEBI’s broader push for ease of doing business across all stock exchanges, including commodity derivatives exchanges.

In its consultation paper, SEBI suggested merging trading, price bands, circuit breakers, bulk and block deal disclosure, call auction mechanisms, liquidity enhancement schemes, margin trading facility (MTF), unique client code (UCC), PAN requirements, trading hours and daily price limits into a single framework. segments

To avoid regulatory overlaps, provisions specifically applicable to clearing corporations should be carved out and moved to a dedicated master circular, SEBI suggested.

To improve transparency, SEBI proposed to merge bulk and block deal disclosures and shift dissemination to client PAN level instead of UCC level, thereby reducing manual reporting requirements for brokers.

The regulator has suggested that market-wide circuit breaker rules, dynamic price band flexing, IPO price bands and call auction procedures should be presented in tabular form, while some duplicative or outdated operational examples should be removed.

The regulator has also proposed to rationalize the MTF norms, with the minimum net worth requirement for brokers specified by the exchanges being Rs. 3 crore to Rs. 5 crores or more.

The timeline for submission of net-worth and auditor certificates should be aligned with the financial reporting cycle, and unnecessary due diligence clauses should be deleted.

Obsolete market-making provisions for the cash segment should be removed and merged into the principle-based Liquidity Enhancement Scheme (LES) framework that now covers equities, derivatives and commodities equally.

SEBI has proposed that under the revised framework, exchanges will have greater flexibility in designing schemes, conducting half-yearly board reviews and offering incentives.

Some old provisions, including negotiated-deal exemptions, guidelines for dedicated debt segments, forward contracts in commodities, MOU-based trading and redundant reporting requirements, have been proposed for scrapping.

Trading hours in all segments including Equity, Derivatives, Commodities, Currency, RFQ, EGR and Social Stock Exchange will be consolidated into one section.

The client code amendment rules will be liberalized to allow substantive amendments, allow PAN-linked multiple UCCs for certain client categories, facilitate easy liability transfer between FPI family accounts, increase the frequency of waivers to once a month and stop reporting quarterly waivers to SEBI.

Penalties will also be harmonized between exchanges and clearing corporations.

Short-selling and securities lending and borrowing (SLB) provisions will be clarified and incorporated into the core framework, with daily disclosures mandatory and responsibilities of exchanges and CCs clearly demarcated.

Commodity-specific disclosures, such as the purpose of hedge delivery, open interest data and risk disclosures by listed entities will also form part of the consolidated circular.

SEBI has proposed to update the provisions on UPI-based trading with blocked amounts in the secondary market while transferring settlement-related aspects to the CC Master Circular.

SEBI has invited public comments on the proposals till January 30.