SEBI Board Approves Open Market Buy-Backs, Mutual Fund Intraday Borrowing

The Securities and Exchange Board of India (SEBI) on Friday approved a range of measures, including the reintroduction of open market buy-backs through stock exchanges, intraday borrowing by mutual funds, and a simplified framework for transmission of securities.

The decisions were taken at the 214th meeting of the SEBI Board held in Mumbai. The regulator also approved a faster processing mechanism for Alternative Investment Funds (AIFs), changes relating to municipal bonds and securitised debt instruments, and a new code of conduct for its Board members.

Open market buybacks through stock exchanges will be reintroduced from August 1, 2026. SEBI stated that the route is being brought back to provide companies with an additional mechanism for undertaking buy-backs while reducing procedural complexity and strengthening investor protection.

The Board approved amendments to the mutual fund regulations to permit intraday borrowing for managing temporary settlement and liquidity mismatches.

The facility will be subject to safeguards and can be used to bridge differences arising from pay-in and pay-out settlement timings, forex settlements, and mark-to-market payment obligations.

To facilitate transmission of securities, SEBI introduced a Quick Transmission Process for small-value claims. It also approved a series of relaxations intended to enable faster transfer of securities to legal heirs and claimants with reduced documentation requirements.

In the alternative investment fund segment, the Board approved the Green Channel: AIF Rollout Upon Document Acknowledgement (GARUDA) mechanism. SEBI stated that the framework is intended to reduce scheme launch timelines and support more efficient deployment of capital by AIFs.

The Board also approved amendments relating to securitised debt instruments. The changes align certain requirements with the Reserve Bank of India's securitisation framework and revise disclosure and governance provisions applicable to market participants.

Changes were approved for municipal debt securities as well. These include measures relating to the refinancing of municipal debt, pooled finance structures, retail investor participation, and post-issue compliance timelines.

Separately, SEBI approved a new code of conduct for its Board members and amendments to service regulations aimed at implementing recommendations concerning conflict-of-interest and disclosure-related matters. The regulator stated that the final code will be made available on its website after completion of the prescribed process.