The Securities and Exchange Board of India (SEBI) is preparing a fresh set of capital market reforms to reduce regulatory complexity, push corporate bond trading and make investments more accessible to retail participants. Chairman Tuhin Kanta Pandey outlined the regulator’s priorities at an event in Mumbai on Thursday. The proposed measures cover changes to listing regulations, tighter oversight of funds collected through public issues, a review of the small and medium enterprise (SME) IPO framework and new initiatives to improve liquidity in the corporate bond market.
is also exploring the use of artificial intelligence (AI) and tokenisation to improve market operations while maintaining investor safeguards. “Our next priorities are simpler rules, deeper markets, responsible innovation and wider access,” Pandey said.
SEBI is conducting a comprehensive review of the Listing Obligations and Disclosure Requirements (LODR) framework as part of its efforts to make compliance simpler and more effective. The regulator has also proposed stronger monitoring of funds raised by companies through public issues.
The SME IPO framework is another area under review. The objective is to help genuine small and medium-sized businesses access capital markets while ensuring that investors remain protected against potential risks.
Pandey said India’s capital markets had expanded impressively, with market capitalisation rising nearly fivefold over the past decade to Rs 472 lakh crore. The country now has more than 15 crore unique investors, while mutual fund assets have reached Rs 83 lakh crore.
With participation and market activity increasing, the SEBI chairman stressed the importance of ensuring that regulatory requirements evolve alongside the changing market landscape.
“We cannot add a manual check for every new transaction. Safeguards must work by design,” Pandey said.
He added that the regulator’s approach would be to align compliance requirements with the nature of market activity, the associated risks and the level of investor sophistication. “Investor protection and market integrity remain non-negotiable,” he said.
Corporate Bonds, Retail Access In SEBI’s Focus
Improving liquidity in the corporate bond market is another priority for the regulator. SEBI is developing a market-making framework intended to make secondary-market trading more active and efficient.
The initiative is aimed at addressing liquidity challenges that can affect investors seeking to buy or sell corporate debt securities after their initial issuance.
SEBI is also working on a framework for Fixed Income Channel Partners. The proposed arrangement is expected to widen retail participation in the bond market through regulated online bond platforms.
Additionally, the second phase of the Demat 2.0 pilot will facilitate secondary-market trading of tokenised corporate bonds. The initiative forms part of the regulator’s efforts to explore new technologies that could improve the functioning of financial markets.
SEBI Explores AI Sandbox For Financial Markets
Alongside changes to conventional market regulations, SEBI is examining how emerging technologies can be adopted responsibly. Pandey said the regulator was exploring an AI sandbox that would allow new applications to be tested in a controlled environment. The proposed initiative would help assess potential risks, develop appropriate safeguards and provide greater regulatory clarity to innovators.
The approach is intended to encourage technological experimentation without compromising the stability or integrity of financial markets.
“The best regulation prevents risks before they become problems. Technology lets us build safeguards into market systems,” he said.
Investor Education Remains A Key Challenge
Despite the expansion of digital investment platforms and growing participation in capital markets, investor awareness remains an important concern for the regulator.
According to SEBI’s Investor Survey 2025, only 36 per cent of investors had moderate to high knowledge of securities markets. The findings underline the need to complement easier digital access with stronger financial awareness and education.
“While digital access creates opportunity, investor education must build the knowledge to use it wisely,” Pandey said.