Verification of market rumours extended; compliance timeline for top listed entities postponed to allow industry standards finalisation.
The circular defers the effective compliance timeline for the proviso to Regulation 30(11) of the LODR Regulations, extending the period before specified listed entities must mandatorily verify and confirm, deny or clarify market rumours, to allow finalisation of industry standards and required amendments to the Regulations under powers exercisable under Section 11 of the SEBI Act read with Regulation 101 of the LODR Regulations.

Regulatory reporting obligations by DDPs and custodians centralized on SI Portal with mandated monthly, quarterly and annual filings.
SEBI requires DDPs and custodians to submit specified regulatory reports on the SEBI Intermediary Portal to standardise compliance; covered reports include DDP internal controls audits, custodians' expert system reviews, audited annual reports with net worth certificates, AI/ML reports, custodian quarterly reports and multiple FPI-related disclosures. Reports must follow prescribed monthly, quarterly, half-yearly and annual periodicity, with monthly and quarterly uploads due within fifteen calendar days after period end; formats will be provided by the Custodians and DDPs Standard Setting Forum and must be published by DDPs and custodians.

Offer for Sale to employees: promoters may use stock exchange mechanism for employee share allocations under prescribed procedural safeguards.
Offer for Sale to employees may be conducted through the stock exchange mechanism as an additional option. Employee bids occur under a new "Employee" category on T+1 day alongside retail, with reserved shares disclosed in the OFS notice; bids are placed at the retail cut-off price subject to any discount, employees pay 100% upfront margin, bids are segregated and not displayed, allotment is based on PAN details supplied on T-1 day, and promoters must transfer total OFS shares including the employee portion to the designated clearing corporation on T-1 day.

Voluntary freezing of trading accounts for suspected misuse to be standardised, with broker procedures and re enablement safeguards.
SEBI directs a standardized framework for voluntary freezing/blocking of online trading account access on clients' requests, to be drafted by the Brokers' Industry Standards Forum under stock exchanges. The framework must specify request modes, acknowledgement procedures, processing timeframes, Trading Member actions upon receipt, re-enablement processes, and client communications. Stock exchanges must ensure implementation, amend bye-laws and establish reporting requirements, and submit a compliance report to SEBI, imposing operational and compliance obligations to protect investor interests.

Client collateral monitoring: reporting streamlined, certain broker reports discontinued while G Principle retained and exchanges must implement.
SEBI discontinues certain broker reporting requirements and deletes Clause 15.5.2 and Tables 5-7 of the master circular, while modifying Clause 15.5.3 to reiterate the G Principle: available funds with the broker and clearing entities must always be equal to or greater than clients' ledger funds. Exchanges must implement the circular immediately, notify brokers, publish the changes, jointly issue operational guidelines and an SOP within 15 days, amend relevant bye laws and report implementation status to SEBI monthly.

Dematerialisation requirement: AIF investments must be held in dematerialised form and custodians appointed, with reporting obligations.
AIFs must hold any investment made on or after October 1, 2024 in dematerialised form; pre-existing investments are exempt except where the investee is legally mandated to dematerialise or the AIF (alone or with certain intermediaries) exercises control, in which case those investments must be dematerialised by January 31, 2025. Custodians registered with SEBI must be appointed before a scheme's first investment; specified existing Category I and II schemes must appoint custodians by January 31, 2025. The SFA, with SEBI, will set reporting standards for managers and custodians, which must be adopted and reflected in quarterly reporting and Compliance Test Reports.

Foreign investment in AIFs: AML and beneficial owner residency rules require suspension of further capital drawdowns when conditions fail.
The investor, or its beneficial owner as determined under the amended Prevention of Money Laundering Rules, must not be on the United Nations Security Council Sanctions List and must not be resident in jurisdictions identified by the Financial Action Task Force as having strategic AML/CFT deficiencies or insufficient progress addressing those deficiencies; if an already on boarded investor fails this condition, the AIF manager must not draw down further capital from that investor until the condition is met.

Short selling framework bans naked shorts, mandates disclosures and reporting, and requires SLB with institutional gross settlement.
SEBI's framework defines short selling as selling securities not owned at trade time, permits retail and institutional participants, and prohibits naked short selling while mandating delivery at settlement. Institutional investors must declare short-sale orders at placement, are barred from intraday square-offs with custodians grossing positions, and a Securities Lending and Borrowing scheme will be implemented alongside institutional short selling. Brokers must report scrip-wise short positions daily for exchange consolidation and weekly public disclosure, and SEBI may review eligible securities and disclosure frequency.