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After a year of sweeping regulatory reforms, the market regulator is expected to focus less on new rulemaking in 2026 and more on consolidating and implementing its 2025 overhauls. The progress of the proposed Securities Markets Code through Parliament further signals a year of operational transition rather than fresh regulatory shocks.
Experts said the coming year is likely to be shaped by an operational shift as intermediaries, fund houses and listed companies adapt to new regulatory frameworks. While Sebi has signalled a shift towards ease of doing business, compliance and enforcement, the transition is expected to test market participants.
“Sebi's major regulatory overhaul in 2025 covering mutual funds, LODR (listing obligations and disclosure requirements), stockbroker regulations, settlement frameworks and AIF (alternative investment fund) norms is expected to make 2026 a year focused on consolidation, improved ease of doing business and stronger market discipline,” said Nirali Mehta, partner at Mindspright Legal.
She added that what distinguished the changes of 2025 was their scale, unlike earlier reforms that were typically sector-specific.
The most talked about reset came in mutual fund regulation, when Sebi proposed a comprehensive overhaul of the total expense ratio (TER) framework.
The proposals sought clearer and more standardized cost disclosures, removal of opaque expense components from TER, and tighter caps on brokerage costs. Although positioned as investor-friendly, the proposals initially unsettled the industry and triggered strong pushback from asset management companies (AMCs) and distributors.
At its 17 December board meeting, Sebi offered some relief. While lawyers and fund houses expected the TER changes to be rolled out in phases, Sebi announced that it would implement the reforms from 1 April 2026.
As a result, 2026 is likely to consist of implementation timelines coming into force rather than new policy shocks.
Beyond mutual funds, Sebi’s 2025 reforms also extended to stockbroker regulations and listing obligations. Changes to broker norms and listing and disclosure frameworks aimed to simplify procedures, align regulation with technology-driven markets and strengthen governance standards.
Sebi also introduced several ease-of-doing-business initiatives in 2025, including rationalized disclosures, streamlined filings and reduced procedural burdens. While intended to smooth regulatory interactions, these changes may still create short-term friction.
That friction is expected to define much of 2026. Legal experts said the simultaneous rollout of multiple reforms has increased compliance complexity and the risk of short-term non-compliance, particularly where guidance is still evolving.
Further, another round of sweeping reforms appears unlikely as the central government’s plan to consolidate securities laws into a unified Securities Markets Code comes into effect.
The bill will merge the Sebi Act, the Securities Contracts (Regulation) Act and the Depositories Act. First announced in the 2021–22 Union Budget, the code is listed for Parliamentary discussion and aims to reduce regulatory overlap and improve ease of doing business.
“Sebi may halt regulation overhauls while the finance ministry might introduce SMC in Parliament soon,” said Sidharth Kumar, senior associate at disputes and transactional law firm. BTG Advaya.
He added that the regulator may instead focus on settlement reforms, including possible changes to penalty frameworks.
Even within a consolidation phase, selective changes are expected. Sebi chief Tuhin Kanta Pandey has indicated that further revamps to LODR regulations are under consideration to address complexity and ambiguity for listed companies.
Changes to takeover regulations under Substantial Acquisition of Shares and Takeovers (SAST) and settlement norms are possible areas of action in 2026.
Enforcement, however, is unlikely to soften. Over the past year, Sebi has stepped up action against unregistered finfluencers, trading academies and market participants offering stock recommendations without proper registration. The regulator has repeatedly warned against unregulated advice on social media and tightened norms governing associations between registered intermediaries and digital influencers.
High-profile cases, including that of trader Avadhut Sathe, underscored Sebi’s stance. Individuals were barred from the securities market and penalized for allegedly providing unregistered investment advice and making misleading claims. Sebi has indicated that such enforcement will continue as the regulator seeks to protect retail investors amid the growing influence of social media.
Questions about regulatory clarity may continue into 2026.
“Greater clarity, transition support and streamlined instructions will help regulated entities adapt effectively and reduce the risk of non-compliance,” Mehta said.
Some legal experts argue consolidation should also extend to other important provisions such as insider trading and fraud. “A simple principle-based approach is needed on what fraud is,” said Sandeep Parekh, managing partner at Finsec Law Advisors, warning that overly tight definitions risk drawing innocent entities into enforcement actions.