SEBI Considers Pre-Open IPO Auction, Intraday Mutual Fund Borrowing Framework

Sebi Chairman Tuhin Kanta Pandey said at the ICICI Securities-India Investor Conference 2026 that the Securities and Exchange Board of India (Sebi) is reviewing regulations governing stockbrokers, mutual funds, initial public offerings (IPOs) and research analysts as part of its efforts to strengthen the capital market ecosystem.

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Pandey said the regulator is examining reforms across multiple segments of the capital market while emphasizing the importance of intermediaries in building investor trust and improving market participation.

Focus on Role of Market Intermediaries

Speaking at the conference, Pandey highlighted the role of stockbrokers as the primary interface between investors and financial markets.

According to Pandey, stockbrokers serve as the first point of contact for millions of investors and play a key role in interpreting market complexities and shaping investor experiences. He said intermediaries carry significant responsibility because investors largely experience the market through them.

Variable Net-Worth Requirements for Stockbrokers

As part of the regulatory review, Sebi is evaluating a framework that could introduce variable net-worth requirements for stockbrokers.

Under the proposed approach, minimum capital requirements would be linked to the size of a broker’s business and risk exposure instead of a uniform requirement for all market participants. The proposal aims to create a more risk-sensitive regulatory framework for the brokerage industry.

Sebi Examines Pre-Open Auction for IPOs

The market regulator is also considering measures to improve price discovery for newly listed companies and relisted securities.

Pandey said Sebi is examining the use of a pre-open call auction mechanism before the start of regular trading hours. The proposal is intended to support more stable and efficient market openings.

The mechanism could help reduce sharp price fluctuations during the opening minutes of trading and provide investors with a more structured price discovery process when shares begin trading on exchanges.

Compliance Relief for Research Analysts

Sebi is also working on reducing compliance and administrative requirements for research analysts.

According to Pandey, the regulator is considering rationalising obligations such as call recording requirements during institutional interactions. The move is aimed at easing regulatory burdens while maintaining market oversight.

Intraday Borrowing Framework for Mutual Funds

For the mutual fund industry, Sebi has proposed a framework that would permit intraday borrowing for liquidity management.

The proposed system would allow mutual funds to borrow funds during a trading session to address temporary liquidity mismatches rather than restricting borrowing solely to emergency situations.

Pandey said the framework is intended to provide a practical mechanism for managing short-term cash flow requirements. The proposal could help fund managers meet redemption obligations without being compelled to sell portfolio holdings to raise immediate cash.

Recent Measures to Support Capital Market Growth

Pandey also outlined several initiatives undertaken by Sebi to support capital market development.
According to the Sebi chairman, the regulator has accelerated IPO timelines, expedited rights issues, rationalised listing norms, and expanded the corporate bond market framework to include Real Estate Investment Trusts

(REITs) and Infrastructure Investment Trusts (InvITs).

Sebi has also introduced the SWAGAT framework, simplified FPI onboarding through digital signatures, reduced registration timelines with RBI support, enabled fast-track fund launches, and dematerialised alternative investment fund units. The regulator said these measures aim to strengthen market infrastructure and improve investor experience.