SEBI floats automatic approval route for exchanges and depositories

what happened

According to TradingView, India's market watchdog has put forward a plan that would let stock exchanges and depositories carry out activities tied to their core work and invest funds without asking for regulatory sign-off, provided financial caps and governance rules are respected.

Under the design, market infrastructure institutions other than clearing corporations could use an automatic channel built on two routes. Route A covers actions taken under SEBI's own directions, certain share transfers inside a group, and investments by a subsidiary funded only from its operating earnings. Route B covers activities that another Indian financial regulator already permits for an entity, as long as SEBI approved them earlier and their nature stays the same.

Total funds deployed through the automatic route in a fiscal year would be capped at the lower of 5% of net worth as of March 31 of the prior year or the regulatory minimum net worth. Net worth after deployment must stay at least 1.5 times that minimum. Each move needs prior board approval, conflict-of-interest controls, board-approved procedures, and half-yearly reports to SEBI within 30 days of each half-year end. The regulator says current rules demand approval even for small investments that support market operations.

why it matters

For Indian exchanges and depositories, the change would cut paperwork and speed up small investments, while the capital caps keep spending tied to net worth. The proposal is still a draft with no final rules, so a direct effect on Indian equities is unlikely for now.

market impact

Indian exchange operators: lower compliance costs if the proposal is adopted

tags

instruments