Sebi revamps stockbrokers rule to ease compliance, push ease of doing biz

Market regulator Sebi has overhauled its more than three-decade-old stockbroker regulations, allowing brokers to carry out activities under the framework of other financial regulators, in a move aimed at providing ease of compliance as well as ease of doing business.

The new rule --- replacing Sebi's (Stock Brokers) Regulations 1992 with the Sebi (Stock Brokers) Regulations 2026 (SB Regulation) -- simplified regulatory language, removed outdated provisions, and introduced clearer definitions.

Under the new rule, Sebi, in its notification on Wednesday, said, "A stock broker may carry out an activity under the regulatory framework of the other financial sector regulator or any other specified authority in the manner as may be specified by the Board. Such activity shall fall under the purview of the concerned financial sector regulator or authority."

Also, the SB Regulations have been structured into eleven chapters, comprehensively covering key aspects of the regulatory regime for stockbrokers.

As part of the restructuring, Sebi has deleted certain schedules that are no longer required and integrated relevant ones directly into the regulations as chapters to improve readability and understanding.

In addition, the overall structure has been streamlined through the removal of repetitive provisions and the consolidation and re-arrangement of sections relating to underwriting, code of conduct, and other activities permitted for stockbrokers.

To further enhance clarity, Sebi has amended several key definitions, including those relating to clearing member, professional clearing member, proprietary trading member, proprietary trading, and designated director.

Sebi said that "proprietary trading" means trading by a stockbroker in its own account, in any segment of a recognised stock exchange, while "proprietary trading member" means a stockbroker whose trades are exclusively in the nature of proprietary trading.

The regulator has also modified and introduced provisions aimed at easing compliance and improving ease of doing business, such as allowing joint inspections and permitting the maintenance of books of accounts in electronic form.

"The Board, along with the recognised stock exchange, clearing corporation or depository, may conduct a joint inspection of the stock brokers in the manner as may be specified... Every stockbroker shall intimate the place of maintenance of books of account, records, and documents to a recognised stock exchange of which it is a member," Sebi said.

Also, the regulator has rationalised the criteria for identifying qualified stockbrokers, ensuring that entities with a large number of active clients or higher trading volumes are brought under enhanced supervision and compliance requirements.

Reflecting the role of stock exchanges as the first-line regulators, Sebi has revised reporting obligations, including the reporting of non-compliance, submission of financial statements, and intimation of the place where books of accounts are maintained.

At the same time, the regulator has removed obsolete and non-applicable provisions, such as those related to physical delivery of shares, the Forward Market Commission, and sub-brokers.

This amendment came after the board of Sebi approved a proposal in this regard in December.

Highlighting the extent of simplification, Sebi had stated the drafting has been done to enhance ease of reading and understanding, with the total number of pages reduced from 59 to 29, and the word count cut from 18,846 to 9,073.