SEBI Proposes Direct API Framework to Replace Centralized STP Hub

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  • Last Updated on 21 May, 2026

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SEBI direct API framework

Draft Circular SEBI/HO/MRD/TPD-1/P/CIR/2026/ XXX; Dated: 19.05.2026

The Securities and Exchange Board of India (SEBI) has proposed replacing the existing centralised Straight Through Processing (STP) Hub system with a direct API-based framework for trade processing.

The proposal is aimed at modernising post-trade infrastructure by improving speed, efficiency, resilience and interoperability among market participants.

1. Proposal to Replace Centralised STP Hub

Under the existing framework, trade processing is routed through a centralised STP Hub.

SEBI has proposed shifting to a direct communication model whereby STP Service Providers (SSPs) would interact with one another through Application Programming Interface (API)-based connectivity instead of routing transactions through a single central hub.

The proposed framework seeks to create a more decentralised and technology-driven processing ecosystem.

2. Faster and More Efficient Trade Processing

The API-based architecture is expected to make trade processing:

  • Faster
  • More efficient
  • Operationally streamlined

By enabling direct communication between SSPs, the proposal seeks to reduce processing delays and improve transaction turnaround time in post-trade workflows.

3. Reduction in Cost and Operational Inefficiencies

SEBI has indicated that the proposed framework may reduce transaction costs and operational inefficiencies associated with centralised processing.

The API-based system is expected to facilitate smoother exchange of trade-related information while reducing dependency on intermediary routing mechanisms.

4. Reduction in Concentration Risk and Dependency

A key objective of the proposal is to reduce concentration risk arising from reliance on a single STP Service Provider or centralised processing framework.

The decentralised communication structure is intended to:

  • Reduce dependency on one SSP
  • Improve system redundancy
  • Strengthen business continuity and operational resilience

5. Improved Operational Resilience and Reduced Errors

The proposed framework aims to improve operational resilience through automation and standardised API-based communication.

SEBI expects the model to:

  • Minimise manual intervention
  • Reduce operational and reconciliation errors
  • Improve reliability of trade processing
  • Enhance service delivery standards among SSPs

6. No Change Required for Brokers, Custodians or Investors

SEBI has clarified that implementation of the proposed framework is not expected to require operational changes for:

  • Brokers
  • Custodians
  • Investors

The proposed changes are intended to remain largely at the infrastructure and service provider level without disrupting user-facing workflows.

7. Objective of the Proposal

The proposal seeks to modernise the STP ecosystem through a faster, cost-efficient and resilient technology framework while reducing concentration risks and improving post-trade operational efficiency in the securities market.

Click Here To Read The Full Circular

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied