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The Securities and Exchange Board of India (SEBI) has recently implemented several significant regulatory changes aimed at enhancing market integrity and investor protection. These initiatives encompass leadership transitions, the introduction of specialized investment funds, and proposed amendments to derivative market regulations.
Leadership Transition at SEBI
On 27th February, 2025, Finance Secretary Tuhin Kanta Pandey was appointed SEBI Chairman by the Indian government for three years. He replaces Madhabi Puri Buch, who became the first woman to head the regulator and oversaw sweeping reforms during her tenure. During Buch’s tenure, SEBI tightened rules in India’s derivatives markets, encouraged safe avenues for retail investors, and made it compulsory for companies and fund houses to disclose extensive information. She also dealt with allegations regarding the Adani group as well, and with investigations which are now complete and yet to be made public.
Introduction of Specialized Investment Funds
The new ‘Specialized Investment Funds’ (SIFs), announced by the SEBI on 27th February 2025, will come into force on 1st April in a bid to accommodate richer investors. These funds have a minimum investment of ₹1 million and allow experienced asset managers to provide a range of investment strategies, such as equity and debt long-short positions. SIFs could be open-ended or close-ended funds, the latter of which would require exchange listings for investor exits. These funds may also trade derivatives for up to 25% of their net assets. SEBI had required differentiating branding of SIFs so as to distinguish them from traditional mutual fund products aimed at retail investors.
Proposed Reforms in Derivative Market Regulations
Securities and Exchange Board of India (SEBI) has laid out a set of new norms to further clampdown on volatility in stock and index derivative markets and prevent the retail participants from getting hurt in their execution of trades. The proposals are geared at establishing market-wide position limits for single-stock derivatives that reference the cash market, and limiting index derivatives only to indices that satisfy certain criteria, including a minimum number of constituents and weightage limits. Besides, SEBI has proposed that a pre-open session in the futures market be introduced similar to that in the cash market to improve price discovery and alleviate volatility. Stakeholders are invited to comment on these proposals until March 17
Impact on Online Brokerages
We have Para-1 of Article-1 here. [If not read, read ‘Para-1 of Article-1′, above, and come here again. There will be few such references.] Recent regulatory headaches at SEBI have rocked Indian online brokerages that let retail investors not only trade but also speculate on high-octane derivatives. Policies to raise the minimum contract size for derivatives as well as those to limit weekly options contracts have significantly reduced trading volumes. Daily volumes of index options have slumped 70% since the changes were made, hurting brokers’ revenues. The idea here is to make the markets less crash-prone and to protect rookie investors from losing money.
Settlement of Front-Running Trade Cases
In December 2024, a total of six entities — individuals including Samir Kothari and Jitendra N. Kewalramani — settled a case of front-running trades with SEBI, paying ₹3.49 crore. The settlement came after the firm accused these entities of unfair trading practices, including placing orders in front of major clients using non-public information to reap the rewards. Under the settlement, the entities shall return unlawful gains to the tune of ₹2.06 crore along with interest and voluntarily desist from trading in securities for six months. This move highlights SEBI’s dedication to ensuring fairness in the market and discouraging unethical trading practices.
Advancements in Market Settlement Processes
The Securities and Exchange Board of India (SEBI) is moving forward with the introduction of same day (T+0) market settlement processes in 2023-2024 and instantaneous settlement in the year thereafter. At present, trades in India is settled in T+1 basis, or one day after the trade is executed. The move to T+0 and beyond — towards instant settlement — is expected to improve upon efficiency of markets, lowering settlement risks and bringing Indian market infrastructure in line with global best practices.
With SEBI adopting a dynamic, independent and pacesetting approach in relation to the challenges and hurdles on different fronts, these measures feature in a few significant steps in terms of involvement of enough identifiable sectors that SEBI has a key role to play in its enforcement and monitoring to fasten the process towards strong financial markets in India.
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