SEBI Set to Partially Roll Back Derivative Settlement Rules After Massive Pushback

India's securities regulator, the Securities and Exchange Board of India (SEBI), is preparing to partially reverse its derivative settlement rules after facing substantial pushback from market participants, according to sources. The decision follows a consultation process in which SEBI received approximately 20,000 suggestions to tweak the rules, responding to a consultation paper issued last month.

The consultation paper, which proposed changes to derivative settlement norms, drew an unprecedented volume of feedback from brokers, exchanges, and investors concerned about the potential impact on liquidity and trading costs. The 20,000 suggestions underscore the depth of market concern and the complexity of the proposed changes. SEBI's willingness to reconsider indicates a responsive regulatory approach, though the exact scope of the partial rollback remains unclear.

The partial reversal could ease immediate market anxieties, but it also raises questions about the final shape of the derivative settlement framework and its long-term implications for India's derivatives market. Market participants will be watching for SEBI's official announcement, which is expected to detail the specific rules to be adjusted. The development may also influence how other emerging markets approach similar regulatory consultations.