SEBI Examines Broker Capital Norms, IPO Auction Mechanism Amid Market Growth

The Securities and Exchange Board of India (SEBI) is reviewing the framework for variable net-worth requirements for stockbrokers and examining changes to initial public offering (IPO) price discovery mechanisms, Chairman Tuhin Kanta Pandey said on Monday.

Speaking at a conference, Pandey outlined several regulatory measures under consideration as the market regulator looks to improve market efficiency and reduce compliance burden for intermediaries.

Pandey said that the regulator is reviewing the framework for variable net-worth requirements for stockbrokers so that capital requirements better reflect operational scale and risk.

Improvements To Price Discovery

SEBI is also evaluating improvements to price discovery through the pre-open call auction mechanism for IPOs and relisted securities. The proposed changes aim to support more stable and efficient market openings. For research analysts, the regulator is working on easing certain compliance requirements.

Pandey said SEBI is considering rationalising obligations, including requirements related to call recording during interactions with institutional investors. The regulator has separately reviewed stockbroker regulations to simplify compliance and align rules with changing market practices.

The measures being examined include:

• A common reporting platform to reduce duplication across stock exchanges.

• A rationalised penalty framework.

• A calibrated approach towards handling technical glitches.

Focus On Mutual Funds And Bond Markets

SEBI is also proposing a revised framework that would allow mutual funds to use intraday borrowing more practically. According to Pandey, the facility would not remain limited to contingency situations and could be used to manage temporary liquidity mismatches.

In the corporate bond market, a working group is finalising operational details for a market-making framework aimed at improving liquidity. Pandey said SEBI and the Reserve Bank of India (RBI) are jointly working on introducing derivatives linked to corporate bond indices.

The regulator is also engaging with custodian banks and the RBI to further reduce registration and onboarding timelines for foreign portfolio investors (FPIs). Pandey highlighted a series of measures already introduced by the regulator.

Founders carrying out reverse-flipping transactions have been allowed to retain employee stock options granted before IPO filings. SEBI has also expanded anchor investor norms to permit participation by large FPIs operating multiple funds.

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Capital Markets Continue To Expand

Pandey said equity issuances reached ₹4.5 trillion in FY26. IPOs raised around ₹1.9 trillion through 366 issues during the year, while corporate bond issuances exceeded ₹9 trillion.

He also pointed to the sharp growth in India's capital markets over the past decade. According to Pandey, market capitalisation has increased from 69% of gross domestic product (GDP) ten years ago to around 128% currently.

Mutual fund assets have expanded from ₹12 trillion to more than ₹80 trillion over the same period. The number of investors in the securities market has reached about 145 million and has been growing at more than 20% annually.

Source:

Moneycontrol