SEBI Unveils Major Revisions to Stock Trading Rules: What You Need to Know

Significant Changes Proposed by SEBI

Mumbai: The Securities and Exchange Board of India (SEBI) has announced a significant revision of trading regulations at stock exchanges, aiming to streamline compliance for market participants by consolidating overlapping rules.

The consultation document suggests integrating various provisions related to trading, price bands, circuit breakers, bulk and block deal disclosures, call auctions, and liquidity enhancement schemes, as stated in an official announcement.

A total of 54 amendments are proposed, which include unifying rules that govern both equity and commodity markets into a cohesive framework. This integration encompasses aspects such as margin trading facilities (MTF), unique client codes, PAN requirements, trading hours, and daily price limits.

The statement indicated that the disclosure requirements for bulk and block deals could be combined, with a recommendation for exchanges to disseminate bulk deal information at the client level (i.e., PAN level) across members.

Additionally, the regulator suggested that rules applicable to clearing corporations should be compiled into a distinct master circular to prevent regulatory overlap.

It was also proposed that penalties imposed by exchanges and clearing corporations should be standardized for modifications of client codes and OTR allocations.

The merging of bulk and block deal disclosures, along with a shift in dissemination to the client PAN level instead of the UCC level, aims to minimize manual reporting by brokers and enhance transparency.

Other proposed revisions include presenting market-wide circuit breaker rules, dynamic price band adjustments, IPO price bands, and call auction procedures in a simplified tabular format, eliminating redundant operational examples.

The overarching goal of these changes is to simplify regulatory requirements, eliminate unnecessary provisions, and discontinue duplicative processes, thereby fostering an improved ease of doing business (EODB) and lessening the compliance burden on exchanges.

Earlier, Union Finance Minister Nirmala Sitharaman had emphasized the need to simplify and reduce compliance costs for financial sector participants through a consultative approach.