SEBI’s 22 October consultation proposes defined automatic approval routes for certain investments by stock exchanges and depositories. Clearing corporations are outside the proposal. Responses are due on 12 November; the draft does not establish a currently operative exemption.[1]
Proposed routes and safeguards
| Element | Draft position |
|---|---|
| Related or incidental activity route | Specified SEBI-directed activity, intra-group share transfers and deployment by an operating subsidiary exclusively from funds generated by its own operationsSource 1 |
| Similar-activity route | An investee under another Indian financial regulator, with previous SEBI approval for the same activitySource 1 |
| Annual aggregate deployment | MII and subsidiaries together: lower of 5% of preceding-31-March net worth and regulatory minimum net worthSource 1 |
| Capital remaining | At least 1.5 times regulatory minimum net worthSource 1 |
| Governance | Prior governing-board approval for each new activity or deploymentSource 1 |
| Reporting | Half-yearly report within 30 days after the half-year endSource 1 |
The paper also proposes arm’s-length arrangements, ring-fenced resource agreements, conflict controls and operating procedures. These conditions are part of the proposed route, rather than optional mitigations after an investment has been made.[1]
A formula can constrain permission more than the headline suggests
Illustration only: if the relevant net worth were 1,000 units and the regulatory minimum 200, the annual cap would be min(50, 200), or 50 units. The separate post-deployment floor would be 300 units. These invented values illustrate the two tests; they are not the capital or permitted investment of an actual exchange.
An automatic route would remove a particular prior-approval step only where all conditions are met. It would not turn unrelated ventures into permissible activity or remove a board’s responsibility to assess the deployment. The proposal’s separate aggregate cap also means that checking one subsidiary in isolation could miss investment elsewhere in the group.
The draft circular leaves commencement to the final instrument. Publication of the consultation should therefore be reported as a proposed process change, with the consultation deadline as the next confirmed milestone.[1]
Sources & further reading
- Consultation on automatic approval routes for related-activity investment by market infrastructure institutions Securities and Exchange Board of India · 22 Oct 2026 · Accessed 27 Oct 2026