Sebi to simplify stock-broker rules, ease legacy share transfer hurdles for investors, says chief Tuhin Kanta Pandey
Mumbai, November 4, 2025
The current broker regulations do not have any definition of algorithmic trading or proprietary trading.
The Securities and Exchange Board of India (Sebi) is set to review and simplify its 1992 Stock Brokers Regulations to make them more relevant, efficient and easier to comply with, Chairman Tuhin Kanta Pandey said on Tuesday.
“Sebi is continuing its effort to simplify and rationalise the regulatory framework,” Pandey said, addressing the Morningstar Investor Conference. He noted that many long-term investors who had purchased shares in physical form before FY20 still face procedural challenges in transferring ownership. “To address this, we are proposing to allow such investors to complete the transfer process now and have those securities registered in their names,” he said, describing it as a long-awaited relief for small shareholders.
The current broker regulations do not have any definition of algorithmic trading or proprietary trading. As per existing regulations, the term small investor means any investor buying or selling securities on a cash transaction for a market value not exceeding Rs 50,000. As the definition is no longer relevant, a Sebi consultation paper has proposed deletion of the same from regulations.
Pandey said Sebi’s ongoing initiatives — from compliance simplification to investor facilitation — are designed to make Indian markets more transparent, efficient, and inclusive. “Today’s investors expect not only market access but also fair terms of engagement. That means transparency in trade execution, settlements, and payouts. Intermediaries must ensure that their client transactions are clean, separate, and fully auditable,” he said.
As new investment products flood the market, Pandey stressed the importance of clear disclosure of risks, costs, and underlying assumptions. Intermediaries, he said, bear the responsibility to vet products thoroughly, monitor any changes in their structure, and ensure clients understand and align with the associated risk-return profile.
“An investor who believes the market is rigged will shy away,” Pandey warned. “If investor trust is exploited, the market will suffer from lower liquidity, higher costs, and ultimately slower growth.”
Highlighting the importance of robust internal systems, he said that when investors put their money into shares, mutual funds, Real Estate Investment Trusts (REITs) or Infrastructure Investment Trust (InvITs), they expect their assets to remain safe — even if intermediaries come under stress. “This demands for strong back-office controls, cyber resilience, and contingency planning. A breakdown at the intermediary level can shake confidence across the market,” Pandey said, underscoring Sebi’s commitment to strengthening market integrity and investor protection.
Unhappy with MCX technical glitches
Sebi has taken a stern view of the repeated technical disruptions at the Multi Commodity Exchange (MCX), said Pandey warning that corrective measures may follow once the regulator completes a detailed review of the latest outage.
Speaking to reporters on the sidelines of a Morningstar event on Tuesday, Pandey said Sebi is not pleased with the recurrence of such incidents. “The last issue was in July, and now there is this one. Repeated breakdowns of this kind are not acceptable,” he remarked, reflecting the regulator’s growing frustration with the exchange’s operational lapses.
On October 28, a technical glitch had led to a delay of over four hours in commencing trading on MCX.
Pandey said Sebi follows a standard operating procedure (SOP) to handle such market disruptions. “There is a clear process — the exchange must report the incident immediately, followed by a root cause analysis. A preliminary report is required within 24 hours and a detailed follow-up report within a week,” he said. The latest MCX disruption, which temporarily halted trading, has once again raised concerns about technology preparedness and contingency planning in India’s financial market infrastructure.
[The Indian Express]
