India's securities regulator, SEBI, is preparing to significantly expand the pool of stocks available for short selling by nearly doubling the number of shares eligible for lending and borrowing.
The plan also includes a reduction in collateral requirements, a move designed to lower the cost of entry for short sellers and improve market efficiency.
Sources familiar with the matter indicate the changes are part of a broader effort to ease restrictions that have long hampered arbitrage and hedging activities in Indian equities.
The regulatory shift marks a notable pivot for a market that has maintained tight controls on short selling in the wake of past stock scam scandals.
By broadening the eligible universe and easing collateral burdens, SEBI aims to attract more institutional participation and improve price discovery.
The move is expected to benefit derivatives traders and global investors who have cited limited short-selling infrastructure as a constraint on portfolio management in India.