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Securities & Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey said that the market regulator will be undertaking a comprehensive review of India's short selling and SLB (Securities Lending and Borrowing) framework, both of which were introduced nearly two decades ago.
Speaking at CNBC-TV18's Global Leadership Summit 2025, Pandey said that both measures have remained the same ever since they were introduced in 2007 and in 2008.
"The framework for short selling was introduced in 2007 and has remained unchanged since then. Further, the securities lending and borrowing mechanism was introduced in 2008 and modified a few times subsequently. However, this segment remains significantly underdeveloped, as compared to other jurisdictions. We will soon form a working group to comprehensively review short selling and the SLBM frameworks," the SEBI Chief said.
As per the 2007 SEBI Short-selling framework, there is a complete ban on naked short selling, where investors just sell shares even if they are not borrowed or located. All investors are required to honor their obligations to deliver securities at the time of settlement.
The framework prohibited institutional investors from intraday squaring-off of short-selling positions. All transactions for institutional investors must be settled on a gross basis at the custodian level.
Introduced in 2008, the SLB framework was to facilitate short-selling, prevent settlement failures and the mechanism is being managed through clearing corporations.
The SEBI Chief also said that the regulator will be undertaking a review of the Listing Obligations and Disclosure Requirements (LODR) regulations as well.
Speaking at CNBC-TV18's Global Leadership Summit 2025, Pandey said that both measures have remained the same ever since they were introduced in 2007 and in 2008.
"The framework for short selling was introduced in 2007 and has remained unchanged since then. Further, the securities lending and borrowing mechanism was introduced in 2008 and modified a few times subsequently. However, this segment remains significantly underdeveloped, as compared to other jurisdictions. We will soon form a working group to comprehensively review short selling and the SLBM frameworks," the SEBI Chief said.
As per the 2007 SEBI Short-selling framework, there is a complete ban on naked short selling, where investors just sell shares even if they are not borrowed or located. All investors are required to honor their obligations to deliver securities at the time of settlement.
The framework prohibited institutional investors from intraday squaring-off of short-selling positions. All transactions for institutional investors must be settled on a gross basis at the custodian level.
Introduced in 2008, the SLB framework was to facilitate short-selling, prevent settlement failures and the mechanism is being managed through clearing corporations.
The SEBI Chief also said that the regulator will be undertaking a review of the Listing Obligations and Disclosure Requirements (LODR) regulations as well.
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