SEBI plans Demat 2.0, graded compliance for brokers

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SEBI plans to launch Demat 2.0, with tokenised corporate bonds available for secondary-market trading

By Anupama Ghosh

Updated - October 24, 2026 at 05:07 PM.

SEBI is exploring graded compliance requirements for stock brokers based on their scale, client exposure and dependence on technology, while working on a framework to enable secondary-market trading in tokenised corporate bonds, Chairman Tuhin Kanta Pandey said in his keynote address.

The regulator is also reviewing the short-selling and securities lending and borrowing (SLB) framework and developing a market-making framework to improve liquidity in the corporate bond market. It plans to launch Demat 2.0, with tokenised corporate bonds available for secondary-market trading.

On technology, SEBI plans to establish an artificial intelligence (AI) sandbox to allow tools to be tested in a controlled environment. It is also working on guidelines for responsible AI use, including safeguards such as kill-switches, data controls and human oversight.

"Tomorrow's markets will not simply arrive. We must define them," Pandey said, emphasising the need for market infrastructure to evolve alongside technological changes.

The regulator is also looking to simplify compliance for depository participants by revising the existing rules and expanding the Samuhik Prativedan Manch, a common reporting platform, to depositories. It is working to consolidate broker inspection portals into a unified digital workflow.

To improve capital efficiency, SEBI is working to fix the parallel clearing requirement for tender offers, buybacks and offers for sale (OFS), which currently adds cost. It also plans to extend automated give-up and take-up facilities to custodian clients, including portfolio management services (PMS) and alternative investment funds (AIFs), so that funds are not blocked while awaiting custodian confirmation.

Pandey said expanding participation beyond major cities would be important for the next phase of market growth. "The next wave in retail broking will not come from the big cities alone; it will come from our towns and villages," he said.

India has more than 15 crore unique investors, equity market capitalisation of about ₹470 lakh crore and mutual fund assets under management of nearly ₹83 lakh crore. Outstanding corporate bonds stand at around ₹61 lakh crore, while foreign portfolio investors hold assets worth about ₹74 lakh crore.

On investor protection, SEBI is stepping up action against unregistered investment advisers and fraudulent trading platforms. Measures include validated UPI handles and verified labels for trading applications. Its Project Jagruk investor-awareness campaign, launched on October 5, has generated more than 15 crore social media views and nearly 110 crore WhatsApp messages, according to the address.

Pandey also urged market intermediaries to treat cybersecurity as a business priority, warning that system outages and breaches can undermine investor confidence. SEBI is working towards digital onboarding, simpler KYC and reduced paperwork for global investors, including non-resident Indians.

Published on October 24, 2026

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