SEBI Annual Report 2025: Cleaner Markets, Deeper Liquidity, and What It Means for You

The Securities and Exchange Board of India (SEBI) has released its Annual Report for FY 2024–25, marking an eventful year for India’s capital markets. The report highlights regulatory updates, enforcement actions, and policy priorities shaping the market’s next phase.

Importantly, it carries distinct takeaways for three groups—Foreign Portfolio Investors (FPIs), brokers, and retail investors—each impacted differently by SEBI’s push to simplify compliance, tighten surveillance, strengthen enforcement, and expand market access. For investors and traders, the report signals cleaner markets, deeper liquidity, and greater access—factors that can create both new opportunities and a stronger safety net.

Key Insights from SEBI Annual Report 2025

Here are the key takeaways from the SEBI annual report:

• Single-Window Clearance

SEBI introduced the SWAGAT-FI system to streamline onboarding for objectively verified low-risk FPIs such as sovereign wealth funds and regulated public retail funds. This digital single-window mechanism reduces procedural friction and accelerates registration timelines.

The regulator also proposed simplified KYC norms and reduced documentation for FPIs investing exclusively in Indian government securities. These reforms aim to reverse the ₹1.27 trillion net equity outflow recorded in FY 2024–25 , the second-largest on record, and promote long-term capital inflows. For market participants, smoother FPI inflows can support equity valuations and improve market depth, boosting overall liquidity.

• Difficult-to-Recover (DTR) Dues

SEBI flagged ₹77,800 crore as DTR dues in FY 2024–25, up from ₹76,293 crore in FY 2023–24 . Of this, ₹61,200 crore is tied to court-appointed committee cases, and ₹12,300 crore is under parallel proceedings in State PID courts, National Company Law Tribunal (NCLT), National Company Law Appellate Tribunal (NCLAT), and the Supreme Court .

While DTR classification is administrative, it signals persistent enforcement bottlenecks. For FPIs, this raises concerns about recovery efficacy and market discipline, especially in high-risk segments. For retail investors, tighter enforcement ultimately helps in protecting capital and weeding out bad actors from the system.

• Increased Penalty

SEBI imposed ₹813.83 crore in penalties in FY 2024–25, a 11x increase from ₹74.66 crore in the previous year. Simultaneously, violations dropped 26% to 463 entities. Notably, 155 entities breached the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) norms, and 116 violated Listing Obligations and Disclosure Requirements (LODR) regulations.

This enforcement spike, coupled with reduced infractions, reflects improved market integrity. For FPIs, this enhances confidence in regulatory oversight and reduces perceived governance risk. For traders and investors, stronger compliance means fairer price discovery, reduced fraud risks, and more confidence in participating actively in markets.

• Derivatives Losses

SEBI’s study revealed that 91% of retail traders incurred losses in equity derivatives in FY 2024–25, with aggregate losses surging 41% year-on-year to ₹1.05 lakh crore. The average loss per trader was ₹1.1 lakh.

Despite reforms like increased contract sizes and intraday position monitoring, retail pain persists. For brokers, this necessitates recalibrating client education and risk disclosures, especially in index options, which saw a 33x turnover surge over six years. For retail traders, SEBI’s findings act as a cautionary guide, highlighting the importance of disciplined risk management and diversification.

• ICDR Disclosure

SEBI’s March 2025 amendments to the Issue of Capital and Disclosure Requirements (ICDR) regulations introduced template-based offer documents and clarified Stock Appreciation Right (SAR)/Employee Stock Ownership Plan (ESOP) treatment . These changes reduce procedural ambiguity and improve pre-listing transparency.

For new issuance advisors, this streamlines deal structuring and enhances investor confidence. For IPO investors, this translates into better disclosure, fewer grey areas, and clearer valuation cues before committing capital.

• Capital Market Expansion

India’s fundraising through new listings hit ₹1.7 lakh crore across 320 companies in FY 2024–25, making it the world’s largest primary market by capital raised . Mutual fund investor base grew to 5.4 crore, with tier III cities contributing 3.3 crore folios. Systematic Investment Plans (SIPs) under ₹500 doubled, indicating deepening retail participation. For FPIs, this signals robust domestic counterflows and liquidity depth, while brokers must adapt to rising small-ticket investor demand. For equity traders, record fundraising and wider retail participation create vibrant trading opportunities across both primary and secondary markets.

• Dispute Resolution Mechanism

SEBI received 703 settlement applications in FY 2024–25, up from 434 in FY 2023–24. Of these, 284 were resolved, yielding ₹798.87 crore in settlement charges and ₹64.84 crore in disgorgement . This reflects a shift toward non-litigious resolution of securities violations. For FPIs and intermediaries, this enhances predictability and reduces reputational risk associated with prolonged litigation. For investors, faster dispute resolution improves trust and provides a stronger sense of recourse in case of market disputes.

• Algorithmic Trading

SEBI introduced frameworks for safer retail participation in algorithmic trading, including mandatory direct payouts and advisories against unregulated platforms. These measures aim to curb speculative excesses and protect retail investors.

For brokers, this requires compliance upgrades and client segmentation strategies. For FPIs, it signals a maturing market with reduced systemic volatility. For traders, regulated algo participation may create a fairer environment with fewer chances of manipulation.

• Complaint Redressal

SEBI launched SEBI Complaint Redress System 2.0 and the MITRA platform to improve grievance handling and transparency . Of the 68,132 complaints received in FY 2024–25, 63,971 were resolved . These platforms also provide visibility into inactive mutual fund folios and unclaimed assets. For brokers, this enhances service accountability. For FPIs, it reflects institutional maturity and investor-centric governance. For retail investors, quicker grievance resolution and visibility of unclaimed assets provide both reassurance and an opportunity to recover idle funds.

• Regulatory Rationalisation

SEBI is committed to rationalising overlapping regulations and leveraging technology to reduce compliance costs. This includes reviewing margin trading funding (MTF) norms, takeover regulations, and asset management restrictions. As of August 2025, the MTF book stood at ₹92,000 crore . For FPIs, this regulatory clean-up improves operational ease.

For brokers, it opens scope for product innovation and leaner compliance workflows. For traders, a simpler regulatory framework means fewer compliance hurdles and easier access to structured products, making it more convenient to execute diverse strategies.

Conclusion

The SEBI Annual Report 2025 highlights India’s determination to build a transparent, investor-friendly market. Beyond the numbers, the deeper message is clear: global investors are being assured of governance stability while domestic retail is nudged towards informed participation. For brokers, this means shifting from transaction-focused roles to advisory-driven models. For traders and investors, SEBI’s reforms provide cleaner disclosures, deeper liquidity, and fairer market practices—creating an environment where opportunities are easier to spot and safer to act upon.