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SEBI to release new derivative settlement guidelines within a week
Reported by Varun Krishnan (Senior Writer) · The Hindu - Business ·
Confirmed by a second source: Economic Times - Markets
The Securities and Exchange Board of India will issue guidelines on determining derivative settlement prices on expiry days within a week following a review of the Closing Auction Session mechanism. SEBI Chairman Tuhin Kanta Pandey announced the timeline on October 10, 2026, at an event organised by the BSE Brokers' Forum. The regulator had sought public comments until October 3 on proposals to review aspects of the closing auction session, market timings, and derivative contract settlement methodology, receiving around 20,000 responses.
Regulatory Updates
SEBI is also reviewing Depositories and Participants Regulations to simplify rules and strengthen fraud prevention. The regulator is exploring a graded compliance framework for brokers based on scale, client exposure, and technology dependence. According to Mr. Pandey, implementation of these proposed changes is targeted for the end of November 2026. The move aims to improve capital efficiency and reduce compliance costs while maintaining settlement safety.
Investor Access
To ease access for overseas investors, SEBI consulted on simplifying digital onboarding for Persons Resident Outside India without requiring their physical presence, receiving over 400 comments on the proposal. Additionally, the regulator will soon issue guidelines for the responsible use of artificial intelligence and machine learning with clear accountability and human oversight.
Context
Market regulators regularly review trading mechanisms and compliance frameworks to protect investor interests and maintain market stability. The Closing Auction Session helps determine closing prices through a structured auction process in equity markets.
ExplainerWhy this matters
What Happened
SEBI has reviewed its Closing Auction Session mechanism and derivative settlement pricing methodology, prompting plans to issue new guidelines within a week alongside broader regulatory overhauls for brokers and overseas investors.
Why It Matters
Changes to derivative settlement prices directly affect how traders and institutions settle futures and options contracts on expiry days, which can significantly impact market volatility and trading costs. Graded compliance frameworks also ease regulatory burdens for smaller entities while maintaining strict oversight on larger market participants.
What Happens Next
Market participants should watch for the official guidelines expected within the week, followed by the planned implementation of regulatory changes by the end of November 2026.
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