SEBI plans Demat 2.0 with tokenised corporate bonds open to secondary trading

India's securities regulator is developing a framework to allow tokenised corporate bonds to trade on the secondary market, part of a package of market-structure changes outlined by its chairman, Tuhin Kanta Pandey, in a keynote address.

The initiative, which Pandey described as Demat 2.0, sits alongside a review of the short-selling and securities lending and borrowing framework and work on a market-making framework intended to improve liquidity in the corporate bond market. Outstanding corporate bonds in India stand at around ₹61 lakh crore, according to the address.

SEBI is also exploring graded compliance requirements for stock brokers, scaled to their size, client exposure and reliance on technology. On technology, the regulator plans an artificial intelligence sandbox for testing tools in a controlled environment and is drafting guidelines for responsible AI use, including kill-switches, data controls and human oversight. "Tomorrow's markets will not simply arrive. We must define them," Pandey said.

Other measures include simplifying compliance for depository participants, extending the Samuhik Prativedan Manch common reporting platform to depositories, and consolidating broker inspection portals into a single digital workflow. SEBI is also working to remove the parallel clearing requirement for tender offers, buybacks and offers for sale, which it says adds cost, and to extend automated give-up and take-up facilities to custodian clients including portfolio management services and alternative investment funds.

On investor protection, the regulator is stepping up action against unregistered investment advisers and fraudulent trading platforms, with measures including validated UPI handles and verified labels for trading applications. Pandey said its Project Jagruk awareness campaign, launched on October 5, had generated more than 15 crore social media views and nearly 110 crore WhatsApp messages. He also urged intermediaries to treat cyber security as a business priority, warning that outages and breaches can undermine investor confidence, and said SEBI is working towards digital onboarding, simpler KYC and reduced paperwork for global investors including non-resident Indians. India has more than 15 crore unique investors, equity market capitalisation of about ₹470 lakh crore and mutual fund assets under management of nearly ₹83 lakh crore, he said.