SEBI Approves Regulatory Reforms to Enhance Market Efficiency

Capital markets regulator SEBI has approved a comprehensive set of regulatory reforms to improve market efficiency, simplify compliance requirements, and enhance investor protection. The decisions, made during SEBI’s board meeting, cover various areas such as share buybacks, mutual funds, alternative investment funds (AIFs), municipal bonds, and the transmission of securities to legal heirs. Notably, SEBI has given the green light for the reintroduction of open market share buybacks through stock exchanges starting August 1, 2026, providing listed companies with more flexibility in managing their buyback processes.
Moreover, amendments to mutual fund regulations have been sanctioned, allowing fund houses to engage in intra-day borrowings to address temporary liquidity mismatches. This borrowing facility can be utilized for operational needs like settlement timing differences, foreign exchange settlements, and derivatives’ mark-to-market obligations.
In a significant move to expedite the launch of Alternative Investment Fund schemes, SEBI has introduced the GARUDA framework, also known as Green-Channel: AIF Rollout Upon Document Acknowledgement. Additionally, SEBI has put forth reforms to strengthen India’s municipal bond market, permitting municipal bodies to raise funds for refinancing existing project debt and establishing a framework for pooled financing by multiple municipalities to support infrastructure funding.
Furthermore, SEBI has streamlined the process of securities transmission post the investor’s demise by eliminating the mandatory probate of wills where succession laws allow and enabling the use of a combined affidavit-cum-No Objection Certificate (NOC) to reduce paperwork. These reforms are part of a broader set of amendments approved by the board, including changes related to securitized debt instruments, the transfer of the Social Stock Exchange Capacity Building Fund, revisions to SEBI’s internal code of conduct, and the selection of SME capital raising as the focus for an independent regulatory review in FY27.