SEBI Plans Reforms to Simplify Compliance and Boost Bond Market Liquidity

SEBI Chairman Tuhin Kanta Pandey announced plans to simplify regulatory compliance, improve corporate bond liquidity and expand retail investor access through updated listing rules and digital initiatives. The reforms also include an SME IPO framework review, tokenised bond trading under Demat 2.0 and an AI sandbox, with investor protection remaining a priority.

The Securities and Exchange Board of India (SEBI) has outlined a new set of capital market reform priorities aimed at simplifying regulatory requirements, strengthening corporate bond market liquidity, widening retail investor participation and encouraging responsible technological innovation. SEBI Chairman Tuhin Kanta Pandey announced these priorities while addressing the Financial Express Modern BFSI Summit 2026 in Mumbai.

The proposed initiatives include a comprehensive review of the Listing Obligations and Disclosure Requirements (LODR) framework, enhanced monitoring of funds raised through public issues and a review of the initial public offering (IPO) framework for small and medium enterprises (SMEs). These measures are intended to improve regulatory efficiency while maintaining transparency, market integrity and investor protection.

To strengthen the corporate debt market, SEBI is developing a market-making framework to improve liquidity in secondary-market bond trading. The regulator is also working on a framework for Fixed Income Channel Partners to facilitate retail participation through regulated online bond platforms. In addition, the second phase of the Demat 2.0 pilot is expected to support secondary-market trading of tokenised corporate bonds.

SEBI is also exploring an artificial intelligence (AI) sandbox that would allow innovative financial applications to be tested in a controlled environment. The initiative is expected to help assess potential risks, establish appropriate safeguards and provide greater regulatory clarity for technology developers.

Highlighting the expansion of India's capital markets, Pandey stated that market capitalisation had increased nearly fivefold over the past decade to ₹472 lakh crore. The country also has more than 15 crore unique investors and mutual fund assets worth ₹83 lakh crore. He emphasised that regulatory requirements must evolve alongside market growth without introducing unnecessary procedural complexity.

Investor awareness remains another key area of focus. According to SEBI's Investor Survey 2025, only 36% of investors demonstrated moderate to high knowledge of securities markets. The regulator intends to continue strengthening investor education alongside digital access and market development.

SEBI's reform agenda will focus on simpler regulations, stronger market infrastructure, improved liquidity and broader investor participation. The regulator has reiterated that innovation and financial market expansion must remain aligned with robust safeguards for investor protection and market integrity. CASansaar