SEBI walks a fine line in 2025 on ease of doing business and tough enforcement

With Tuhin Kanta Pandey’s appointment in March, SEBI adopted a more calibrated approach, seeking to balance investor protection with ease of doing business for intermediaries and issuers
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SHASHANK PARADE/PTI

The year 2025 marked a strategic shift for India’s securities regulator, as the Securities and Exchange Board of India (SEBI) transitioned from rapid reforms to a more sustainable regulatory pace.

Following an intense period of strict measures throughout 2024 involving derivatives oversight, corporate governance standards, and participant compliance, SEBI entered a new phase under Chairman Tuhin Kanta Pandey’s leadership from March 2025. This administration prioritized equilibrium between market accessibility and investor safeguards.

Observers noted tangible effects in regulatory decisions and market behavior. Key developments included comprehensive revisions to decades-old frameworks governing stockbrokers and mutual funds regulations. The regulator eased public shareholding mandates for major listings while granting extended compliance periods, demonstrating willingness to reduce administrative burdens.

Despite this moderating approach, regulatory vigilance continued unabated. The derivatives segment received significant attention following explosive retail trading growth in futures and options. SEBI implemented enhanced margin protocols, refined open position ceilings, and mandated clearer risk disclosures – aiming to curb speculative losses from weekly expiries and intricate trading strategies.

Market rumors about prohibiting weekly derivative contracts prompted Chairman Pandey to publicly clarify that future measures would follow rigorous consultation. “Any regulatory adjustments will remain evidence-based,” he stated.

Jane Street scrutiny and SME market reforms

The investigation into Jane Street’s alleged expiry-day manipulation demonstrated SEBI’s commitment to monitoring institutional trading conduct. The probe resulted in substantial provisional deposits from the firm ahead of final hearings scheduled for January.

Concurrently, the SME IPO ecosystem underwent intensified scrutiny. After identifying speculative listings with post-debut volatility and governance deficiencies, SEBI strengthened financial eligibility criteria, extended promoter lock-ins, and heightened post-listing compliance for smaller enterprises – ensuring only fundamentally robust companies accessed public capital.

Regulatory actions expanded beyond traditional market entities, targeting unauthorized financial influencers like “Baap of Charts,” Adhvut Sathe, and Asmita Patel for unregistered advisory services.

Ongoing policy evolution

Several transformative proposals experienced implementation delays or modifications. The consolidated contract note requirement for foreign investors, originally delayed four times, finally took effect in June. Other initiatives like the proposed closing auction mechanism and clearing corporation reforms remain under review.

The T+0 settlement rollout faced indefinite postponement as brokers cited operational challenges despite the regulator’s push for faster trade cycles. Additional policy reviews impacted IPO allocation methods, block trade procedures, mutual fund fee models, and related-party transaction rules.

“The 2025 regulatory recalibration represents the most significant mergers & acquisitions framework advancement since 2011,” noted Anurag Tyagi, Partner at BDO India. “These changes should transition India toward transparent, market-driven M&A activity, moving beyond promoter-centric dynamics.”

Looking toward 2026, pending proposals including securities lending reforms, takeover code adjustments, and short-selling regulations may advance. Market participants also await progress on landmark developments like the NSE’s long-anticipated public offering. The coming year will prove crucial for translating deliberated policies into operational realities.

Published on December 28, 2025