The Securities and Exchange Board of India (SEBI) released a consultation paper on June 22 proposing to open Direct Market Access (DMA) to all categories of investors, expanding beyond the current availability only to institutional clients. The draft circular also suggests changes to stock exchange technology, cybersecurity, audit, disaster recovery, algorithmic trading, and market access rules. Public comments on the proposals are open until July 13, 2026, according to medianama.com.
The consultation paper, titled "Consultation Paper on Draft Circular for Trading Software and Technology at Stock Exchanges and Draft Consolidated Circular on Common Information Technology (IT) Related Provisions for MIIs," aims to consolidate existing provisions applicable to stock exchanges, clearing corporations, and depositories. It follows the Finance Minister's FY2023-24 budget announcement to simplify and reduce compliance costs in the financial sector. Notably, the draft proposes removing the requirement that investment managers using DMA be registered with SEBI, allowing more flexibility for investment managers acting on behalf of clients.
The move to broaden DMA access is significant as it allows investors to place orders directly into an exchange's trading system through a broker's infrastructure without manual intervention from the broker's dealing desk. This change could enhance market efficiency and accessibility. The proposed overhaul aligns with global trends to modernize trading infrastructure and reduce regulatory burdens, potentially impacting how market participants engage with stock exchanges in India.
Public feedback on SEBI's draft circular is being accepted until July 13, 2026, after which the regulator will review the comments before finalizing the rules. The consultation paper is the fourth in a series aimed at updating technology and trading infrastructure regulations in India's financial markets.