New Delhi, Aug 6 (PTI) Markets regulator Sebi is planning to revamp securities lending and borrowing framework and undertake a pilot project on tokenisation of corporate bonds using distributed ledger technology as part of its agenda for 2026-27 and beyond.

Outlining the regulator’s roadmap in Sebi’s annual report, Chairman Tuhin Kanta Pandey said the regulator will continue to focus on removing regulatory redundancies, simplifying procedural requirements and leveraging technology to ease the compliance burden.

“The Securities Lending and Borrowing scheme needs revamping to improve price discovery and facilitate interlinkage between cash and derivatives segments,” Pandey said.

The framework for short selling, introduced in 2007, has largely remained unchanged since its inception. Similarly, the Securities Lending and Borrowing (SLB) mechanism, rolled out in 2008 and modified a few times since, remains underdeveloped compared with global markets, underscoring the need for a comprehensive reassessment.

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.

As part of its technology initiatives, Sebi is planning a pilot project on tokenisation of corporate bonds to evaluate the feasibility of using Distributed Ledger Technology (DLT) for securities.

The project will assess potential benefits such as faster settlement, operational efficiencies, programmability through smart contracts and integration with central bank digital currency (CBDC)-based settlement mechanisms.

In May, Pandey had said Sebi was exploring a pilot to assess whether tokenisation could enable faster settlement, better traceability, automated servicing and greater transparency.

In its annual report for 2025-26, the regulator said it plans to deepen the cash equities market to spur capital formation and strengthen India’s commodity derivatives markets, covering both agricultural and non-agricultural commodities.

On the technology front, Sebi will work towards preparing the securities market for risks arising from quantum computing and developing long-term technology roadmaps for market infrastructure institutions (MIIs).

Further, Sebi will continue to deploy advanced analytics and artificial intelligence and machine-learning models to detect complex market manipulation patterns and network-based frauds.

During 2025-26, the regulator took a series of measures to strengthen deepen capital markets along with its internal governance.

A high-level committee reviewed Sebi’s framework on conflict of interest and disclosures, and the regulator has decided to implement several of its recommendations.