SEBI eases settlement norms, overhauls PMS regulations to improve market efficiency

The Securities and Exchange Board of India (SEBI) has approved new settlement regulations aimed at reducing regulatory discretion and making it easier for entities facing enforcement proceedings to settle cases.

The new framework replaces the 2018 Settlement Proceedings Regulations, under which certain categories of violations — including those involving significant market impact, substantial investor losses and threats to market integrity — were excluded from settlement mechanisms.

Addressing concerns over whether the revised framework could allow violators to settle by paying amounts lower than the impact caused by their actions, SEBI Whole-Time Member Kamlesh Varshney said “the philosophy remains the same. The discretion to reject settlement applications still stays with the high-powered committee.”

He added that the new regulations were aligned with provisions introduced in the Securities Contracts (Regulation) Act, which provide a statutory framework for settlement and related mechanisms.