Chairman‍‌‍‍‌‍‌‍‍‌ Tuhin Kanta Pandey Informs of SEBI‍‌‍‍‌‍‌‍‍‌ Examining Short Selling and SLB Procedures

New Delhi, 7 November: SEBI, the markets regulator, will set up a working group to study short selling and the Securities Lending and Borrowing (SLB) method in detail, as was indicated by the Chairman Tuhin Kanta Pandey on Friday.

At the CNBC-TV18 Global Leadership Summit, the chairman expressed his views and said, “The decision has been taken to constitute a working group which will scrutinize short selling and SLB in detail.”

Review of Longstanding Frameworks

The short-selling policy, which was originally established in 2007 and has hardly been changed since, is under review. Likewise, the SLB mechanism, which had been initiated in 2008 and is occasionally modified, is still far from the closest international standards. Consequently, SEBI plans to fill in the gap through a comprehensive review.

Under the SLB agreement, investors and entities with shares in their demat accounts can lend shares to other market participants for a specified period. The transaction is done via exchange platforms, while the clearing houses offer the counter-guarantees, which ensure that the settlement of the transactions is safe.

The mechanism allows the lenders to spend less on the holdings and, at the same time, get money on the side, while the new owners may use the obtained securities for short selling or to avoid failure to deliver. SEBI is of the opinion that the SLB sector is an essential instrument for the enhancement of market liquidity and the market’s efficiency.

Broader Regulatory Overhaul

In addition to disclosing these details, Pandey also revealed that the regulator is currently heavily involved in the thorough examination of the stockbroker and mutual fund rules. “We will soon conduct an in-depth study of Listing Obligations and Disclosure Requirements (LODR) 2015 as well as settlement regulations,” he added.

FPIs are Still Confident in India’s Growth

Responding to the accusation of foreign portfolio investors (FPI) that they suddenly offload securities – Pandey said that global investors continue, to be optimistic about India’s economic growth. “FPIs have very strong faith in India’s story,” he stated.

He went on to say that the discussions mostly ignore the large volume of the FPI transactions that take place in the primary market which offsets secondary market movements. Pandey pointed out that domestic participation has increased significantly with retail investors now accounting for nearly 18% of the listed equities and being well-supported by domestic institutional inflows.

“FPIs are no longer subordinate but are being complemented by robust domestic flows,” he said while also pointing out that FPIs still, in aggregate, represent approximately 900 billion USD of market capitalization in India.

About Weekly Expiries and Regulatory Approach

Responding to the question on whether SEBI planned to ban weekly expiration of derivatives, Pandey completely avoided the question. “Please don’t put words in my mouth. The only thing that is for sure is that the system is working,” he said. Changes, if any, will be made after meeting with other stakeholders, he added.

He also assured that the regulator’s policy decisions would be done with great care and on the basis of facts. “We are taking a consultative, data-driven approach,” he said and also pointed out that the aim of the regulator was to solve market problems without abrupt ‍‌‍‍‌‍‌‍‍‌moves.

REF: https://www.sebi.gov.in/media-and-notifications/speeches/nov-2025/address-of-chairman-at-cnbc-tv18-global-leadership-summit_97663.html

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