SEBI completes Demat 2.0 pilot phase 1, eyes secondary market next

SEBI has successfully completed the first phase of its Demat 2.0 pilot for corporate bonds and will now focus on bringing secondary market trading into the new DLT-based framework, Chairman Tuhin Kanta Pandey announced.

The Securities and Exchange Board of India (SEBI) has completed the first phase of its Demat 2.0 pilot for corporate bonds and will next bring secondary-market trading into the new technology framework, SEBI Chairman Tuhin Kanta Pandey said on Thursday.

Speaking to the media on the sidelines of the Global Fintech Fest 2026 in Mumbai, the SEBI Chairman said three issuers had participated in the first phase of the pilot. “Now this pilot phase 1, we did, three issuers were done. That is, it was successfully done,” he said. “The next phase is that the secondary level of trading will be brought,” he added.

New Technology Framework

Under Demat 2.0, the same corporate bonds are being handled using distributed ledger technology, or DLT, rather than creating a new asset class or a separate market structure. “This is regulatory and not a new asset class. The same corporate bonds, which used to be in a different technology, which we are now calling DMAT 1.0. Because now we have come to DMAT 2.0. So this is a new technology, DLT, which we have used,” he said during the interaction.

Atomic Settlement with CBDC

The system also uses the Reserve Bank of India's Central Bank Digital Currency (CBDC) for settlement. Chairman said the new framework allows the securities and payment legs of a transaction to take place simultaneously, rather than through a sequential process. “In today's technology, there is a sequential process. But in DLT technology, there is a simultaneous process. Meaning, money and securities together,” he said.

“Either together or nothing. That is, there will be no partial settlement. That is why it is called Atomic Settlement,” he added. Atomic settlement refers to a transaction in which the transfer of the security and the payment are completed together, reducing the gap between the two parts of settlement.

No Change for Investors or Regulations

The Chairman said investors will continue to use the existing depository system and Demat accounts. “The corporate bonds that we have made are DMAT 2.0. This means that we have the same depository system, same framework, same DMAT account. Investors don't have to do anything new,” he said.

Separately, speaking to ANI on the sidelines of the event, the SEBI Chairman said the regulatory framework governing corporate bonds would remain unchanged even when the new technology is used. “The whole regulations which are applicable to the otherwise bond market, using traditional technology, the same thing is, only the technological changes there; rest everything is the same,” he told ANI.

Preparing for Quantum Computing Risks

He further noted that SEBI is preparing the securities market for risks that could arise from quantum computing, which could potentially break existing cryptographic systems. “So therefore, we have to change to post-quantum cryptography, just preparing for that,” he said.

“We should be prepared for it, and that is how the SEBI has been moving, how to make markets prepare for it,” he added. (ANI)

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