SEBI Overhauls Rulebook for Stock Exchanges and Clearing Corporations; Aims to Slash Compliance Burden by Half

Mumbai, June 23: The Securities and Exchange Board of India (SEBI) launched a sweeping overhaul of its regulatory framework for stock exchanges, clearing corporations and commodity derivatives exchanges on Monday, proposing to consolidate, simplify and modernise a rulebook that market participants have long found layered and unwieldy. The initiative, carried out under SEBI’s stated vision of “optimal regulation,” is one of the most comprehensive reviews of exchange-level compliance architecture the regulator has undertaken in recent years. 

At the heart of the exercise is the proposed creation of a single unified Master Circular for exchanges, merging provisions that currently sit in two separate documents: the Master Circular for Stock Exchanges and Clearing Corporations and the Master Circular for Commodity Derivatives.  

A separate Master Circular for Clearing Corporations will be issued alongside, and a third consolidated circular will cover common information technology provisions applicable to all Market Infrastructure Institutions, or MIIs, including depositories. The consolidation is expected to reduce the total page count of the Master Circular for exchanges by approximately 50%, a meaningful reduction in the volume of compliance material that brokers, exchanges and clearing houses must navigate. 

Several outdated and duplicative requirements are on the chopping block. SEBI has proposed discontinuing a range of periodic reports that exchanges currently file directly with the regulator, shifting that oversight responsibility either to MII committees or to public disclosures on websites. The requirement for investment managers to separately register with SEBI in order to provide Direct Market Access facilities is proposed to be scrapped altogether. In its place, a single-window registration system will be introduced for brokers seeking to offer Smart Order Routing services, streamlining a process that currently involves multiple steps. 

Other proposals with direct market implications include a review of the system and network audit framework for MIIs, liberalised norms for Liquidity Enhancement Schemes, a cleaner delineation of responsibilities for monitoring position limits across products, and a revision of the client code modification framework. Notably, Close to Money norms for options in goods are proposed to be discontinued. In a move that will simplify the fund structure for exchanges, SEBI has also proposed merging the Investor Protection Fund for the equity segment with that of the commodity derivatives segment into a single unified pool. 

On the technology side, SEBI proposed merging 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. The regulator has also proposed that immediate corrective action be triggered if actual utilisation of any IT component breaches 75% of installed capacity, with such cases reviewed by the Standing Committee on Technology. 

The fourth and final consultation paper in this series, covering Trading Software and Technology for Exchanges, is currently open for public comment. Stakeholders can submit their views to SEBI until July 13, 2026, after which the revised Master Circular will be issued incorporating feedback from all four rounds of consultation. 

Source:

• SEBI Press Release PR No.35/2026, June 22, 2026 
• https://www.sebi.gov.in/media-and-notifications/press-releases/jun-2026/ease-of-doing-business-comprehensive-review-of-master-circular-for-stock-exchanges-and-clearing-corporations-and-the-master-circular-for-commodity-derivatives_102288.html