SEBI to comprehensively review short selling and SLBM frameworks: Tuhin Kanta Pandey

Securities Exchange Board of India (SEBI) chief Tuhin Kanta Pandey has said the capital markets regulator will comprehensively review the short selling and securities lending and borrowing (SLBM) mechanism after acknowledging that the system remains underdeveloped compared to other jurisdictions.Speaking at the CNBC TV-18 Global Leadership Summit, Pandey said, “An active SLBM program is critical to improving pricing and facilitating interconnection between the cash and derivatives segments. From a borrower’s perspective, it facilitates settlement of short-sold securities while allowing lenders to earn compensation on their inactive securities.”

The short selling framework was introduced in 2007 and has remained unchanged since then. Furthermore, the SLBM was introduced in 2008 and subsequently modified a few times. However, this segment remains significantly underdeveloped.”

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Speaking at the summit, he also said that the health of the Indian primary market remains strong, reflecting continued investor confidence and robust capital raising activity. He noted that around Rs 4.6 trillion was raised through equity markets in FY25, while nearly Rs 2 trillion has already been mobilized in the current fiscal year. The number of unique investors has also increased to 135 million, a sharp increase from 38 million in FY19, underscoring the growing participation of retail investors.

However, Pandey pointed out that despite this progress, challenges still exist. Citing SEBI’s investor survey, he said that while 63% of households are aware of securities products, only 9.5% have actually invested, and nearly 80% remain risk averse mainly due to fear of losses. Therein lies both the opportunity and the challenge, he said, adding that there is a vast amount of untapped domestic capital waiting to be deployed. Pandey urged the industry to seize this opportunity – to raise capital, create value for stakeholders and contribute to shaping India’s economic future. He highlighted that SEBI has been continuously taking steps to streamline the capital raising process, including shortening the IPO and rights issue timelines. Recent proposals, such as a scale-based approach to minimum public offering size and calibrated MPS timelines aligned with market absorption capacity and liquidity, aim to encourage more listings. Pandey also emphasized that the governance framework for Market Infrastructure Institutions (MIIs) has been further strengthened to ensure that public interest remains the top priority. Also read: Nomura upgrades Asian Paints, Berger Paints to Buy. This is why analysts are turning bullish

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