SEBI revives open-market buybacks from Aug 1, 2026

What SEBI’s board cleared this time

SEBI’s board, chaired by Tuhin Kanta Pandey, approved a set of regulatory changes aimed at market efficiency, easier compliance, and stronger investor protection. The two decisions drawing the most discussion online relate to share buybacks and mutual fund liquidity tools. SEBI approved the reintroduction of open-market buybacks through stock exchanges, effective August 1, 2026. It also amended mutual fund rules to allow intraday borrowings for managing temporary liquidity mismatches. SEBI has positioned both moves as operationally useful, while adding safeguards to limit misuse. Social media discussions have focused on whether these changes improve price discovery and reduce friction in day-to-day fund operations. Alongside these, SEBI also referred to measures spanning AIF processes, securitised debt alignment with the RBI framework, and other market infrastructure topics. However, the most detailed guardrails disclosed so far relate to buybacks and intraday borrowing.

Open-market buybacks through exchanges are back

SEBI will reintroduce open-market buybacks through stock exchanges from August 1, 2026. This route had been discontinued earlier after changes in the tax regime, as referenced in the discussions. With the change, companies can choose between tender offers and open-market purchases through exchanges. SEBI also noted that buybacks can currently be undertaken through tender offers and the open-market route through book building. The return of the exchange route is being presented as an additional option rather than a replacement. Online commentary has largely framed it as a tool that could make execution more flexible within the market’s normal trading framework. At the same time, participants have highlighted that open-market execution needs tighter guardrails to protect investors and prevent signal-driven trading. SEBI’s framework explicitly includes new conditions on timeline, utilisation, and promoter participation.

The 66-working-day timeline and the 40% utilisation rule

A key guardrail is the shortened execution window for exchange buybacks. SEBI said the buyback must be completed within 66 working days from the opening date. This replaces the longer window that market participants were used to under earlier approaches, as implied in the commentary around “six months” versus the new timeline. SEBI also mandated that at least 40% of the earmarked funds must be utilised during the first half of the buyback period. The design of this rule has been discussed as a way to reduce last-minute buying that can distort trading patterns. It also attempts to ensure companies do not announce buybacks without meaningful early execution. Another aspect being debated is how companies will plan daily purchases to meet the utilisation requirement while staying within market conditions. SEBI has not, in the shared context, disclosed a detailed daily pacing formula, but it has clearly set the minimum utilisation milestone. For investors, the practical takeaway is that exchange buybacks will have a defined timeframe and a front-loaded utilisation expectation.

Promoter participation is barred, and holdings are frozen

SEBI’s framework states that promoters and their associates will not be allowed to participate in these open-market buybacks. In addition, their holdings will remain frozen during the buyback period. This has been one of the most discussed points on social media because it directly addresses concerns about insiders transacting around buyback activity. SEBI also indicated that open-market buybacks through stock exchanges will be treated as normal trading transactions. Because of that, SEBI said the requirement of a separate trading window is being dispensed with. It also said the display of the company’s identity as purchaser on the trading screen will be dispensed with. These changes have triggered mixed reactions in online threads, with some users focusing on execution simplicity and others focusing on transparency. What is clear from SEBI’s statement is that the promoter restriction is intended to ring-fence insider influence during the buyback window. Investors tracking buyback announcements will likely need to focus more on disclosed progress updates and compliance with utilisation rules.

Merchant banker appointment is no longer mandatory

Another compliance-related change is that the appointment of a merchant banker for buybacks has been made optional. The stated intent, as discussed, is to reduce compliance costs. Earlier, this appointment was mandatory, and SEBI is now allowing companies to decide based on their circumstances. Commentary around the board discussion suggests that if a company does not appoint a merchant banker, responsibilities typically handled in that structure will still need to be addressed through other accountable functions. The context indicates that company officials and other gatekeepers such as compliance personnel and auditors remain part of the overall ecosystem of checks. Market participants are debating whether the optional approach will mainly benefit smaller buybacks where costs are more visible. Others argue that optionality could increase execution flexibility without necessarily reducing oversight, given exchange processes and SEBI’s stated safeguards. The key factual point is simple: SEBI has removed a mandated intermediary appointment for buybacks, while keeping other structural restrictions in place. Investors should watch how widely this option is adopted once the route becomes effective.

Mutual funds can borrow intraday to manage mismatches

SEBI also approved amendments to the SEBI (Mutual Funds) Regulations, 2026 to facilitate intraday borrowings by mutual funds. The stated purpose is to manage temporary liquidity mismatches arising during the day. SEBI explicitly mentioned use cases such as pay-in and pay-out settlement timing differences within asset classes. It also mentioned forex settlements and payments for mark-to-market obligations in derivatives. The discussions emphasise that this is an operational tool aimed at smoother settlement management rather than an investment strategy. Importantly, SEBI framed it as an addition to the current borrowing permitted for mutual funds. The existing borrowing framework cited in the context allows borrowing up to 20% of the net assets of a scheme for meeting unitholder payout requirements such as redemptions. Social media reactions have mostly centred on whether this reduces settlement risk and avoids forced selling during short intraday gaps. From SEBI’s wording, the policy intent is operational continuity, not higher risk-taking.

Safeguards on intraday borrowing: no leverage, repay same day

SEBI clarified that intraday borrowing cannot be used as a source of leverage. It also said these borrowings must be repaid by the end of the trading day. The responsibility for ensuring repayment lies with the asset management companies, as stated in the board meeting context. SEBI further noted that any borrowing extending overnight would have to comply with existing regulatory limits. The specific limit referenced in the discussion is the 20% borrowing cap under the mutual fund regulations for permitted purposes. This structure tries to separate short-lived timing mismatches from longer borrowing that could alter a scheme’s risk profile. Market participants are discussing how frequently such intraday facilities may be used during volatile sessions with heavier derivatives mark-to-market movements. Others are focused on the governance aspect, because the AMC must operationally ensure same-day squaring up. Based on the disclosed safeguards, SEBI’s intent is to allow flexibility without changing the fundamental borrowing discipline for mutual funds.

What market participants are watching into August 1

The August 1, 2026 start date has become a focal point for conversations around corporate capital allocation and trading dynamics. Companies now have a clearer menu of buyback routes: tender offer, book-building open market, and exchange-based open market once reinstated. Investors are watching how often exchange buybacks are chosen versus tender offers, especially under the new 66-working-day and 40% utilisation conditions. Another point being tracked is how disclosures and progress reporting evolve alongside the “normal trading” treatment described by SEBI. On the mutual fund side, market participants are watching whether intraday borrowing meaningfully reduces settlement-related disruptions, especially in days with heavy flows or forex-related timing gaps. The strict same-day repayment requirement is central to whether the measure is viewed as a safety valve rather than a risk channel. Across both decisions, SEBI’s messaging has been consistent in the context provided: enable smoother operations, but place explicit boundaries on conduct and usage. The next phase of discussion is likely to shift from announcements to early examples of how the mechanisms work in practice once implemented.