The wait for clarity on India’s derivatives settlement mechanics is ending. Tuhin Kanta Pandey, Chairman of the Securities and Exchange Board of India (SEBI), stated on Saturday that the regulator plans to issue guidelines on changes to the closing auction session within the next week. The move comes directly in response to a consultation paper addressing persistent concerns over the settlement price of derivatives on expiry days. This fix is critical for option sellers and hedgers who have faced volatility in final price discovery.
Beyond the immediate auction fix, Pandey outlined a decade-long strategy to deepen India’s cash markets. The focus is shifting toward greater participation, stronger securities borrowing and lending, and more efficient hedging. He emphasized that improving liquidity and price discovery requires structural changes, not just incremental updates. For brokers, SEBI is considering graded compliance requirements based on size, client exposure, and technology reliance, aiming to reduce the regulatory burden on smaller players while keeping oversight tight.
On the operational side, the regulator is working to eliminate parallel clearing arrangements for tender offers, buybacks, and offers for sale. Currently, these transactions fall outside the interoperability framework, driving up costs and compliance complexity. Pandey indicated that SEBI targets implementing these changes by the end of November 2026. Meanwhile, the consultation on simplifying digital onboarding for non-resident Indians has already gathered more than 400 comments, signaling strong industry interest in removing physical presence requirements.
The regulator is also moving to formalize the use of artificial intelligence in market operations. The proposed framework will adopt a tiered approach, mandating clear accountability, data controls, kill switches, and human oversight for any AI or machine learning applications. This is part of a broader effort to strengthen cybersecurity safeguards and business continuity across market infrastructure institutions. Pandey concluded by stating that India must build a securities market that attracts global investment, balancing scale with resilience and speed with safety.