In 2025, SEBI and allied regulators implemented a series of structural reforms that materially altered how India’s capital markets function.
 The focus shifted away from volume-led participation toward market stability, transparency, and risk containment, while selectively expanding access to new asset classes.

These changes affect how derivatives are traded, how companies raise capital, how investors are protected, and where future market participation may deepen.

1. Recalibration of Equity Derivatives

SEBI introduced multiple measures to reduce excessive volatility and speculative leverage in the derivatives market.

What changed

• Equity derivative contracts now have standardized settlement days, with each exchange limited to a single expiry weekday.

• Index lot sizes were increased, raising the capital required to participate in index derivatives.
  Eligibility norms for non-benchmark indices were tightened to reduce concentration risk.

• Position limits are now monitored intraday, not just at end of day.
  Market exposure is measured using delta-adjusted open interest, improving risk visibility.
  
  

  Why it matters
   These steps raise the entry threshold for low-capital speculation, reduce expiry-day distortions, and favor disciplined participation.
   Near-term trading volumes may normalize, but overall market stability improves.

  
  

2. Stronger Disclosure and Governance Standards

Capital-raising and institutional governance frameworks were tightened to improve decision-quality for investors.

What changed

• IPO disclosures now require standardized industry-specific KPIs, improving comparability across issuers.

• SME listings face stricter eligibility norms, including positive Free Cash Flow to Equity in two of the last three years.

• Governance norms for market infrastructure institutions were strengthened through clearer role separation and external performance evaluations.
  
  Why it matters
   This reduces narrative-driven listings, improves transparency, and aligns disclosures more closely with long-term capital allocation needs.

3. Investor Protection and Digital Market Infrastructure

Technology was used to address fraud risks and operational friction.

What changed

• Intermediary payments must now use validated UPI IDs, supported by a SEBI verification mechanism.

•  DigiLocker integration enables digital access to holdings and statements, easing inheritance and reducing unclaimed assets.

• Retail algorithmic trading was formalized under a regulated framework with audit trails and broker accountability.

Why it matters
 Operational trust improves, fraud risk reduces, and retail participation becomes more structured rather than informal or opaque.

4. Broadening Market Participation and Products

Regulatory changes also expanded the scope of investable and hedgeable assets.

What changed

• SEBI-registered brokers can now access the government securities market through RBI infrastructure.

• Minimum investment thresholds for social finance instruments were lowered to encourage wider participation.

• SEBI became the regulator for electricity derivatives, enabling power market participants to hedge price risk.

• A new category of Specialized Investment Funds (SIFs) was introduced between mutual funds and PMS.
  
  

Why it matters
 Market participation expands beyond equities into real-economy risk management, while offering sophisticated investors more tailored structures.

Conclusion

The set of reforms introduced in 2025 reflects a clear recalibration of India’s capital markets. The regulatory focus has moved away from maximising short-term participation toward strengthening market resilience, improving transparency, and expanding access in a more controlled manner.

For investors, this means operating in a market with higher entry thresholds in certain segments, clearer disclosures, and stronger safeguards around execution and settlement. While some measures may temper speculative activity in the near term, they also lay the groundwork for more sustainable participation and deeper institutional confidence over time.

As new asset classes such as electricity derivatives and specialized investment funds take shape, and digital infrastructure continues to mature, the opportunity set in Indian markets is likely to broaden beyond traditional equity-led strategies. Understanding these structural shifts is becoming as important as tracking earnings or macro data.