Sebi Board Approves Comprehensive Overhaul of Stockbroker Regulations to Simplify Compliance

The Securities and Exchange Board of India (Sebi) has revamped its stockbroker regulations, replacing the decades-old framework with new rules. This update aims to simplify compliance and align oversight with current market practices. The changes include clearer definitions, streamlined reporting, and the removal of outdated provisions.

In a recent board meeting, Sebi approved the proposal to replace the Sebi Stock Brokers Regulations, 1992 with the Sebi Stock Brokers Regulations, 2025. The new SB Regulations are organised into eleven chapters, covering essential aspects of stockbroker regulation. This restructuring integrates necessary schedules into the regulations as chapters for better readability.

Streamlined Structure and Definitions

Sebi has removed unnecessary schedules and consolidated sections related to underwriting, code of conduct, and other broker activities. This streamlining eliminates repetitive provisions. Key definitions have been amended for clarity, including those for clearing member, professional clearing member, proprietary trading member, proprietary trading, and designated director.

The board has also introduced provisions to ease compliance and improve business operations. These include allowing joint inspections and maintaining books of accounts electronically. These changes aim to make regulatory processes more efficient for stockbrokers.

Enhanced Supervision and Reporting

Sebi has rationalised criteria for identifying qualified stockbrokers. Entities with many active clients or high trading volumes will face enhanced supervision and compliance requirements. This ensures that significant market players are closely monitored.

Reflecting the role of stock exchanges as primary regulators, Sebi revised reporting obligations. These include reporting non-compliance issues, submitting financial statements, and notifying where books of accounts are kept. Such measures aim to enhance transparency and accountability in the market.

Removal of Obsolete Provisions

The regulator has decided to eliminate outdated provisions related to physical share delivery, the Forward Market Commission, and sub-brokers. This move further simplifies the regulatory framework by removing non-applicable rules.

Sebi highlighted that these changes significantly simplify the regulations. The total number of pages has been reduced from 59 to 29, while the word count decreased from 18,846 to 9,073. This reduction enhances ease of reading and understanding for stakeholders.

The updated SB regulations incorporate suggestions from a public consultation held in August. Sebi expects these changes to improve compliance by ensuring simplified language and structured provisions that align with evolving requirements.

With inputs from PTI