India's Securities and Exchange Board (SEBI) plans to study the impact of recent derivatives reforms before setting new rules. It aims to lower costs for short selling and share lending, cut foreign investor registration to days, and review margins for cash equities, enhancing market liquidity, accessibility, and stability.
India's market regulator SEBI announced a comprehensive approach to further strengthen regulations and operational ease across multiple market segments. The regulator will consider fresh derivatives regulations after assessing recent measure outcomes focused on liquidity and risk control to curb speculative excesses.
Key initiatives include plans to reduce costs for taking short positions and lending/borrowing securities via the Securities Lending and Borrowing (SLB) mechanism. This aims to deepen market liquidity, encourage balanced participation, and bring more efficiency to price discovery.
SEBI also intends to drastically cut the foreign portfolio investor (FPI) registration period from months to just a few days. Digitization and streamlined KYC will facilitate smoother overseas investor entry, anticipated to align with global best practices and boost inflows.
Additionally, SEBI is reviewing margin requirements for cash equities, striving for an optimal balance between risk control and capital costs. This follows ongoing reforms in derivatives margins and short selling frameworks to improve market stability while enabling investor flexibility.
Key Highlights:
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SEBI to study effects of recent derivatives reforms before fresh rules
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Plans to lower costs and enhance Securities Lending and Borrowing (SLB)
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Foreign investor registration time to reduce drastically to days
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Margin rules for cash equities under review for improved market balance
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Ongoing focus on reducing speculation, improving liquidity, and aligning with global norms
Source: Reuters, India Today, Financial Express