SEBI Bans Short Selling in non‑F&O shares from 22 december 2025

Securities and Exchange Board of India (SEBI) has issued a revised framework on short selling through circular SEBI/HO/MRD/MRD‑PoD‑3/P/CIR/2024/1 dated 5 January 2024, read with the master circular SEBI/HO/MRD2/PoD‑2/CIR/P/2023/171 dated 16 October 2023.Under this framework, with effect from Monday, 22 December 2025, short selling will not be permitted in any stock that is not part of the Futures and Options (F&O) segment on Indian exchanges.

As per the new rules, investors can short sell only those securities that are available in the F&O segment, in line with existing norms for derivatives‑eligible stocks. For all non‑F&O securities, clients will be allowed to sell shares only up to the quantity actually held in their demat accounts, effectively making such trades compulsory delivery‑based.

Intraday traders in non‑F&O stocks may still carry out jobbing activity, but only by first buying and then selling the same shares within the same trading day. Any attempt to sell first and buy later in these non‑F&O counters will be treated as short selling and will be completely prohibited once the new framework becomes effective.

These changes will require brokers, proprietary desks and active traders to rework intraday strategies, realign risk management systems and focus short‑side opportunities largely within the more liquid F&O universe.