Sebi Chief Says Exchanges Can’t Regulate Themselves in Self-Listing Debate

Exchange Self-Listing Puts Market Oversight Under Scrutiny

SEBI says a change is possible to examine, but exchange self-listing is not currently under active review.

The central concern is oversight of an exchange’s own shares

Pandey’s remarks bring a structural question in market regulation into focus. Stock exchanges operate trading platforms, but they also have responsibilities as market regulators. If an exchange’s own shares trade on its platform, the institution would be overseeing activity involving a security in which it has a direct interest. Pandey said an exchange cannot regulate “its own thing” on its own, underscoring why India’s present framework does not permit self-listing.

The issue has gained attention following the public listing of the National Stock Exchange. One question raised is whether NSE shares could be included in indices such as the Nifty 50 if the exchange listed its shares on its own platform. That illustrates how a change could have consequences beyond the exchange itself, touching market oversight and index-related decisions. The remarks do not, however, indicate that SEBI has decided to change the rules.

Any change would require a broader review

Pandey said SEBI could consider whether safeguards would make self-listing workable, while stressing that the practice has both advantages and drawbacks. The regulator could examine how exchanges in Europe and the New York Stock Exchange operate, but international examples would inform—not settle—the question for India.

India’s market structure is a relevant distinction: it has multiple exchanges, Pandey said. Any policy assessment would therefore need to consider how a self-listed exchange’s regulatory role could be separated from decisions affecting its own shares, and whether safeguards would address that conflict. For now, the existing model remains in place and a review has not been actively initiated. Investors should not read the discussion as a near-term rule change.

Reviving an exchange is a question of commercial viability

The discussion also covered whether closed exchanges, including the Calcutta Stock Exchange, could be revived. SEBI’s framework does not rule out new exchanges, but any proposal would have to meet requirements covering governance, capital and shareholding. Permission to establish an exchange would not, by itself, ensure that it could attract enough trading activity to sustain operations.

Pandey pointed to liquidity as a key test. Electronic trading has reduced the importance of an exchange’s physical location, with investors able to access Indian exchanges from across the country and overseas. A prospective or revived venue would need a credible plan to attract clients in that environment. Its business case would depend on whether it could build sufficient participation, rather than simply reopen its doors.

Technology costs raise the bar for new venues

Exchanges also face the need for heavy, ongoing technology investment, with requirements expected to grow and risks—including those associated with artificial intelligence—adding to the challenge. Co-location facilities remain relevant to brokers, even as electronic access has weakened the link between an exchange and a particular city. Together, these considerations make scale, client demand and sustained investment central to any revival proposal.

For investors, the immediate significance is regulatory rather than a change to trading arrangements. A future self-listing proposal would require scrutiny of governance and safeguards, while a new exchange would need to demonstrate operational and commercial feasibility. Neither possibility has been presented as an active SEBI initiative.

Key Highlights

• SEBI’s current framework does not allow exchanges to list their own shares.
• The regulator may consider safeguards, but a review has not been actively initiated.
• SEBI could study international models while weighing India’s multiple-exchange structure.
• New or revived exchanges would need to meet governance, capital and shareholding requirements.
• Liquidity, client demand and continuing technology investment are central to an exchange’s viability.

Investor Note: Treat self-listing as a governance debate, not an imminent market change. Any eventual proposal would need to address the conflict between an exchange’s market oversight role and its own listed shares, while a revived exchange would still have to prove that it can attract enough activity to support its costs.