Sebi is planning reforms to cut collateral costs and ease long-term trading, aiming to reverse a $50 billion foreign outflow.

The changes largely target two things: how much money investors must set aside to trade, and how easy it is to hold positions over longer periods.

For highly liquid stocks, Sebi is looking at cutting collateral requirements by 15% to 20%.

For derivatives contracts running beyond a year, it wants to reduce upfront margin too, since current rules make longer-term hedging costlier than it needs to be.

Sebi is also planning to nearly double the number of shares available for lending and borrowing, a system that lets investors borrow shares to sell them short.

If the reforms go through, they are expected to roll out over the next nine months, giving brokers and fund managers time to adjust their systems. The urgency comes from the numbers.

Foreign investors sold more than $50 billion worth of Indian equities between October 2024 and June 2026, National Stock Exchange data shows.

India’s weight in the MSCI emerging markets index has slipped below 12%, down from a peak of 21% in September 2024. This follows a separate set of reforms the finance ministry rolled out in June.

It raised the cap on individual foreign investment in listed Indian companies from 5% to 10% per company, with the overall limit lifted to 24% from 10%.

The government also widened the pool of government bonds open to foreign investors, adding longer 15, 30 and 40 year issuances, and exempted interest and capital gains on these bonds from tax starting April 2026. Not everything has gone smoothly.

A new method for calculating closing stock prices, introduced earlier this year, triggered sharp swings in the Nifty 50 during its first week of use.

Sebi has said it plans to stick with the changes as the market adjusts.

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