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SEBI Policy Framework

SEBI Policy Framework and Regulatory Oversight

The SEBI Policy Framework and Regulatory Oversight are the structured system by which the Securities and Exchange Board of India regulates and supervises the securities market in India. It protects investors by ensuring that the fairness and transparency of market practices support the orderly development of the capital market. Accordingly, SEBI exercises regulatory oversight in respect of listed companies, market intermediaries, investment vehicles, and market infrastructure institutions through a combination of statutory regulations, disclosure-based policies, continuous supervision, and enforcement mechanisms. This would also give SEBI an opportunity to maintain market integrity and prevent abuse in view of new emerging market risks and regulatory challenges.

What is SEBI ?

The Securities and Exchange Board of India (SEBI) is an autonomous regulatory authority established under the SEBI Act, 1992 to regulate the securities market in India. It oversees stock exchanges, listed companies, mutual funds, intermediaries (like brokers, merchant bankers, investment advisers), and market infrastructure institutions such as clearing corporations and depositories

Objectives of SEBI

SEBI operates with the following core objectives:

  • Protection of investor interests
  • Regulation and orderly development of the securities market
  • Promotion of fair, transparent, and efficient market practices
  • Prevention of fraud, market manipulation, and unfair trade practices
  • Strengthening market integrity and financial stability

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Key principles governing SEBI Policy Framework

SEBI’s policy framework is guided by well-established regulatory principles, including:

  • Disclosure-based regulation, focusing on transparency and informed decision-making
  • Risk-based supervision, allowing proportionate regulation based on market risk
  • Accountability and governance, ensuring responsibility of regulated entities
  • Procedural fairness and due process in enforcement actions
  • Alignment with global best practices, while addressing domestic market needs

Other Compliance Requirements

Additional obligations include:

  • No other business can be carried out apart from account aggregation.
  • Submission of periodic returns as prescribed by the RBI.
  • Ensuring compliance with rules on:
  • Managing outsourcing risks
  • Declaration of dividends
  • Prior approval for changes in shareholding or control
  • Reporting changes in directors, address, or auditor

The RBI also retains the power to inspect AA operations, grant exemptions, or issue further clarifications as needed.

SEBI Policy

The Indian stock market has several key regulations that support the Indian stock market and SEBI has formulated these regulations. Some of the key regulations are as follows:

SEBI Regulations
SEBI (LISTING OBLIGATIONS & DISCLOSURE REQUIREMENTS) REGULATIONS, 2015 (LODR)
The listed companies are mandated by the LODR regulations to comply with the corporate governance rules and share necessary information with the public. In order for investors to make an informed decision, the LODR regulations provide for transparency and accountability. The LODR regulations have been amended by SEBI in 2025 raising the thresholds for SMEs in respect of matters of public interest, especially in respect of transactions involving related parties.
SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2018 (ICDR)
The ICDR rules regulate the offering of securities by companies, like public offerings, rights issues, and first choice offerings. The companies are required to follow these rules so that they can provide the investors with all the necessary information to enable them to take a proper decision. The involvement of lead managers in certain cases was alleviated by SEBI in the year 2025 to simplify the rights issue procedure for companies to raise finances and also to decrease the paper documentation involved.
SEBI (PROHIBITION OF INSIDER TRADING) REGULATIONS, 2015
These rules are responsible to conduct trades on unpublished price-sensitive information or UPSI. Insider trading is a practice whereby a person trades stocks using unpublished information. SEBI is responsible for making sure that there is no possession or exploitation of information and use it in any way. They are also responsible for ensuring any information that may affect stock prices in 2025. SEBI clarified this rule to widen the UPSI scope to include information about orders or contracts that have been granted or cancelled outside the ordinary course of business.
SEBI (MUTUAL FUNDS) REGULATIONS, 1996
Mutual funds functioning in India are required to follow these rules that define the manner in which a mutual fund may be established and operates. These rules also ensure that the handling of the investors' money by the mutual fund is transparent. In order to safeguard the interest of the investors and ensure transparency of the operations of mutual funds, SEBI has amended these rules in 2025.
SEBI (ALTERNATIVE INVESTMENT FUNDS) REGULATIONS, 2012
Alternative investment funds, or AIFs, must abide by these rules if they want to function. Private equity funds, hedge funds, and venture capital funds come under AIFs. SEBI ensures that these funds abide by these rules and that all persons are able to access these funds. To make it easier for these funds to grow, SEBI modified these regulations in 2025.
SEBI (RESEARCH ANALYSTS) REGULATIONS, 2014
Research analysts, who provide stock recommendations and investment advice to the general public, have these regulations to comply with in their line of business. These regulations provide a code of conduct for research analysts and ensure that the research reports are free from any conflict of interest and personal clear picture. These regulations were modified by SEBI in the year 2025 to promote higher levels of integrity and protection for the investors.
SEBI (INVESTMENT ADVISERS) REGULATIONS, 2013
The Investment Advisers Regulations are aimed at providing regulations to individuals and organizations that provide investment advice to their clients. They compel these advisers to register with SEBI and also adhere to a code of practice in order to ensure that the advice they provide to their clients is in their best interest. Disclosure of conflict of interest is also required in these regulations. Amendments were made in these regulations in 2025 by SEBI in order to make these services more transparent.

Recent Amendments to SEBI Regulation (2025)

In 2025, SEBI rolled out focused regulatory changes to strengthen investor protection, sharpen disclosures, and make compliance more efficient across the securities market. The amendments span listing regulations, intermediaries, mutual funds, market infrastructure, and market conduct.

Amendments to LODR Regulations

  • Clearer materiality thresholds so only truly price-sensitive information is treated as material, reducing unnecessary disclosures.
  • Stronger governance and disclosure norms for related party transactions, board oversight, and shareholder communication.
  • Improved timelines and standardised digital formats for financial results, annual reports, and governance filings.

Amendments to Merchant Bankers Regulations

  • Revised registration norms covering fit-and-proper criteria, net worth, and compliance history.
  • Clearly defined duties in public issues, rights issues, and open offers, with sharper due-diligence obligations.
  • Stronger internal governance requirements on risk management, conflicts of interest, and regulatory reporting.

Mutual Fund and Intermediary-Related Changes

  • Rationalisation of mutual fund expenses, enhanced scheme disclosures, and tighter stewardship standards.
  • Stricter suitability, risk profiling, and disclosure norms for investment advisers and research analysts, including use of digital tools and algorithms.
  • Greater transparency in fees, commissions, and distribution practices.

Governance of Market Infrastructure Institutions (MIIs)

  • Tighter corporate governance standards for exchanges, clearing corporations, and depositories, including board independence.
  • Enhanced risk-management norms covering settlement, margining, default handling, and cyber security.
  • Expanded disclosure and reporting requirements to strengthen regulatory oversight.

Market Conduct, Settlement and Investor Protection

  • Broader and clearer insider trading and unfair trade practice provisions, covering wider categories of UPSI and connected persons.
  • Introduction and expansion of shorter settlement cycles, including T+0 in select segments.
  • Improved investor grievance redressal mechanisms, tighter market surveillance, and better inter-regulatory coordination.

SEBI Role in Market Governance

SEBI plays a central role in market governance by regulating stock exchanges, depositories, clearing corporations, and market intermediaries. It has significantly strengthened corporate governance standards by following role.

  • Protects investors’ interests through disclosure norms, grievance redressal mechanisms and action against miss‑selling and fraud.
  • Supervises stock exchanges, clearing corporations and depositories to maintain robust governance and systemic stability.
  • Detects and penalises insider trading, manipulation and other unfair trade practices to preserve market integrity.
  • Sets corporate governance standards for listed companies, strengthening transparency, accountability and minority shareholder protection.

Key Takeaways

SEBI plays a central role in regulating and supervising India’s securities market through a structured policy framework and robust regulatory oversight. Its disclosure-driven and risk-based approach ensures investor protection, market transparency, and fair practices while supporting the orderly growth of the capital market. With continuous regulatory updates and stronger governance standards, SEBI’s framework remains responsive to evolving market risks, making compliance and regulatory alignment essential for all market participants.

Frequently Asked Questions (FAQ)

SEBI is the statutory regulator that oversees India’s securities market and protects investor interests.

It is a structured set of laws, regulations, circulars, and guidelines issued by SEBI to regulate capital markets.

It ensures fair trading, transparency, market integrity, and investor protection.

Listed companies, intermediaries, mutual funds, AIFs, stock exchanges, and market participants.

SEBI mandates disclosures, monitors fraud, resolves grievances, and enforces penalties.

They govern disclosure and corporate governance norms for listed entities.

Yes, non-compliance can lead to penalties and regulatory action.

Through registration, compliance norms, inspections, and audits.

Penalties, restrictions, suspension, or cancellation of registration.

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