PTI New Delhi

Sebi will soon set up a working group to undertake a comprehensive review of short selling and the Securities Lending and Borrowing (SLB) frameworks, its Chairman Tuhin Kanta Pandey said on Friday.

The framework for short selling, introduced in 2007, has largely remained unchanged since its inception. Similarly, the SLB mechanism, rolled out in 2008 and modified a few times since, continues to be underdeveloped compared to global markets, highlighting the need for a thorough reassessment.

Explaining the move, Pandey said, "We will soon form a working group to comprehensively review short selling and the SLB frameworks," while speaking at the CNBC-TV18 Global Leadership Summit.

Under the SLB mechanism, investors or institutions holding shares in their demat accounts can lend them to other market participants for a fee.

The transaction is executed through the stock exchange platform, with the clearing corporation providing a counter-guarantee to ensure smooth and secure settlement.

Experts noted that borrowers typically use these securities for short-selling or to avoid settlement failures.

By enabling investors to earn additional income on otherwise idle shares, the SLB framework not only benefits lenders but also improves liquidity and overall market efficiency. Pandey further added that comprehensive reviews of stockbroker and mutual fund regulations are already underway.