In a consultation document, SEBI suggested eliminating the current STP Centralized Hub that facilitates message transfers among various STP Service Providers (SSPs). Message exchanges would instead occur through direct Application Programming Interface (API) connections between SSPs.
Under the new framework, SSPs serving different STP clients will be mandated to implement standardized API endpoints following mutually agreed protocols and data formats. This approach would enable a seamless and secure transfer of messages and data without the need for a centralized hub.
“This will also improve the scalability and cost efficiency of the STP framework while accommodating the transaction volumes of institutional trading,” SEBI stated.
The proposed changes would not necessitate any adjustments at the level of end users — including stock brokers, fund houses, and custodians.
It is expected to “likely encourage more SSPs to get involved, thereby alleviating the concentration risk associated with a single large SSP and enhancing the value-added services provided by SSPs to STP users,” added SEBI.
STP allows for automated end-to-end processing of financial transactions and facilitates the exchange of various messages among market participants, including Electronic Contract Notes (ECNs).
SEBI reported that an analysis of STP traffic from April 1 to December 31, 2025, indicated that 95-99 percent of all STP messages were channeled through one SSP, resulting in significant concentration risk.
Moreover, because inter-SSP messages currently transit through a single entity — the STP Hub — the system is vulnerable to a potential single point of failure.
The regulator pointed out that the costs and latency linked to routing messages through the hub may encourage market participants to consolidate their operations with a single SSP, exacerbating concentration risk.
Simultaneously, the minimal traffic traversing the STP Hub suggests it is no longer fulfilling its intended goal of facilitating broad-based interoperability, as stated by SEBI.
To further enhance operational efficiency and reduce manual involvement, SEBI has also proposed the introduction of an optional API-based message exchange service for STP users served by the same SSP.
This feature, alongside the current upload and download mechanism, would allow for seamless automated communication between users, minimizing human errors and improving security.
The Securities and Exchange Board of India (SEBI) is inviting public feedback on the proposals until June 9.
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(Edited by : Navneet Singh)
First Published: May 19, 2026 11:22 PM IST
