The Securities and Exchange Board of India (Sebi) has launched a comprehensive review of regulations governing stock exchanges, clearing corporations and commodity derivatives exchanges as part of its broader ease of doing business initiative. According to a press release issued on Monday, the exercise is aligned with SEBI's vision of 'optimal regulation' and is aimed at simplifying regulatory requirements, removing outdated provisions and rationalising reporting obligations for market infrastructure institutions (MIIs). The regulator has already released four consultation papers aimed at improving ease of doing business for stock exchanges, with consultations on exchange administration, trading at stock exchanges and exchange-traded derivatives completed, while comments are still being invited on the consultation paper covering trading software and technology frameworks. The proposed restructuring could reduce the size of the master circular for exchanges by nearly 50 per cent through the creation of a single consolidated master circular for exchanges by merging provisions applicable to stock exchanges and commodity derivatives exchanges. As per The Times of India, the review covers the master circular for stock exchanges and clearing corporations as well as the master circular for commodity derivatives, with the process being carried out through consultations with stakeholders across the market ecosystem.
The Securities and Exchange Board of India has proposed a comprehensive overhaul of information technology regulations for market infrastructure institutions as part of its broader ease of doing business initiative. According to reports from The Economic Times, The Hindu BusinessLine, NDTV Profit, and The Times of India, the regulator's consultation paper aims to simplify compliance requirements, remove redundancies and ensure regulatory consistency across all market infrastructure institutions. The proposed framework would merge provisions from existing Master Circulars for stock exchanges and clearing corporations with the Master Circular for commodity derivatives, creating a unified approach to IT governance. The regulator has consolidated multiple circulars and master circulars into a simpler framework while aligning legacy rules with the Cyber Security and Cyber Resilience Framework (CSCRF). The proposals are aimed at simplifying regulatory requirements, removal of redundant provisions, discontinuation of duplication, in order to promote ease of doing business and reduce the compliance burden on exchanges. As per The Times of India, SEBI has also proposed separate master circulars for clearing corporations and a consolidated circular covering common information technology provisions applicable to MIIs.
Under the proposed framework, immediate corrective action would be required if actual utilisation of any IT component exceeds 75% of installed capacity. As reported by The Hindu BusinessLine and NDTV Profit, such instances would be reviewed by the Standing Committee on Technology (SCOT), while capacity augmentation would be undertaken where repeated breaches of the threshold are observed. For depositories, if actual capacity utilisation of any IT component exceeds 75% over a period of 15 days on a rolling basis, immediate action would be taken to enhance the capacity. The MII's Capacity Planning and Real Time Performance Monitoring Policy shall include the framework for handling actual capacity utilization exceeding 75% of installed capacity, including situations necessitating augmentation of installed capacity. The regulator has also merged provisions relating to co-location and co-hosting facilities in the commodity derivatives segment with the broader technology framework applicable to stock exchanges, while retaining segment-specific requirements.
Sebi has proposed removing repeated references to the Cyber Security and Cyber Resilience Framework (CSCRF) from various sections of existing circulars, noting that the framework already applies directly to market infrastructure institutions and intermediaries. According to the consultation paper, the regulator also proposes harmonising capacity planning requirements across stock exchanges, clearing corporations and depositories. The framework would cover common IT-related areas including cyber security, cyber resilience, annual system audits, business continuity planning and disaster recovery (BCPDR), capacity planning and technology advisories. The regulator has also removed several outdated or overlapping provisions from the Master Circular for Stock Exchanges and Clearing Corporations (MSECC), including provisions relating to cyber crisis management plans, vulnerability assessments, data encryption, cyber resilience testing and security operations centres. To reduce duplication, the regulator suggested retaining detailed provisions on system clock synchronisation with atomic clocks at a single location within the proposed framework instead of repeating them across multiple chapters.
To improve ease of doing business, the regulator has suggested allowing vendors in exchange co-location facilities to provide either hardware or software services, instead of mandating end-to-end solutions. As reported by The Economic Times, the change is intended to provide trading members greater flexibility, lower costs and more choice in selecting service providers. The consultation paper also proposes rationalising provisions relating to algorithmic trading by bringing together rules on order-to-trade ratio penalties, algorithm tagging and software testing under a single section. This consolidation aims to streamline regulatory requirements for algorithmic trading activities across all market segments. The regulator has also introduced a single-window registration framework for brokers offering Smart Order Routing (SOR) to enhance operational flexibility. Other proposed changes include discontinuing the requirement for registration of investment managers providing Direct Market Access (DMA) services and reviewing the existing system and network audit framework for market infrastructure institutions. Among the additional proposals under consideration are ending the requirement for registration of investment managers providing direct market access facilities, introducing a single-window registration system for brokers offering smart order routing services, reviewing the system and network audit framework for MIIs, and liberalising norms governing liquidity enhancement schemes.
The Securities and Exchange Board of India has sought public comments until July 13, 2026 on the proposed framework. As reported by The Economic Times, Business Standard, The Hindu BusinessLine, NDTV Profit, and The Times of India, the regulator aims to reduce duplication by retaining detailed provisions on system clock synchronisation with atomic clocks at a single location within the proposed framework instead of repeating them across multiple chapters. The proposed unified circular would consolidate technology-related provisions currently spread across multiple circulars governing stock exchanges, clearing corporations and depositories. The regulator has also merged technology provisions applicable to commodity derivatives exchanges with those governing equity exchanges, creating a more uniform regulatory framework across market segments. The consultation paper emphasizes that several provisions currently duplicated across different circulars and frameworks could be streamlined to improve regulatory clarity and reduce compliance burden without diluting oversight. The final framework will be notified after considering comments received from market participants and other stakeholders. This latest consultation represents the fourth in a series of reviews undertaken by Sebi to simplify regulations for market infrastructure institutions, following earlier feedback on administration, trading and exchange-traded derivatives. The regulator has also suggested discontinuing several reports currently submitted to SEBI, with oversight responsibilities proposed to be shifted to MII committees or addressed through public disclosures.
