Broad Framework for Short Selling

In order to provide a mechanism for borrowing of securities to enable settlement of securities sold short, SEBI has put in place a full-fledged securities lending and borrowing (SLB) scheme for all market participants in the Indian securities market under the overall framework of “Securities Lending Scheme, 1997” of SEBI. The Securities Lending Scheme was notified by SEBI on February 06, 1997. The guidelines for this facility of short selling and the framework for securities lending and borrowing have been specified in the Master Circular for Stock Exchanges and Clearing Corporations dated October 16, 2023. To enable the mechanism of short selling, the facility of securities lending and borrowing (SLB) scheme was put in place for all market participants under the overall framework of “Securities Lending Scheme, 1997” of SEBI. Further, SEBI issued a circular on the Broad Framework for Short Selling, modifying the Master Circular issued on October 16, 2023.

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The SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 notified on May 31, 1993 have served as one of the important fundamental regulatory framework for the Indian securities market. With the technological developments, the way in which securities are issued, held, and transferred is now fundamentally different. Registrars to an Issue and Share Transfer Agents (RTAs) are key to this process. Further, the number of securities held in physical form has been going down consistently after the introduction of dematerialization of securities. It may be mentioned that the number of physical shareholding is less than 1% of the total holding as on March 31, 2025. Role of RTAs has further reduced in view of the fact that securities are issued only in dematerialized form. In response to this changing landscape, SEBI undertook a comprehensive review of RTA regulations, 1993 resulting in notification of SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 2025 on December 16, 2025.

Following is the collection various NISM Study Material of Indian Securities Market. The NISM Study Material may be downloaded from the provided pdfs.