According to Sebi, the move is aimed at modernising the regulatory architecture in line with evolving market practices while making compliance simpler and more transparent for market intermediaries.
The revamped framework seeks to streamline regulations by using simpler and clearer language, eliminating repetitive and redundant provisions, and updating rules to reflect contemporary changes in the securities market. The regulator also approved modifying and including certain provisions to provide greater clarity and ensure ease of compliance for stock brokers.
Sebi said the updated regulations are expected to improve regulatory efficiency, reduce ambiguity, and align broker-related norms with the current market ecosystem and technological advancements.
The decision was taken during a board meeting held today which was chaired by Chairperson Tuhin Kanta Pandey, his fourth since he assumed the office in March.
Features of new regulations approved by the board are as follows:
1) Reorganised Framework: SB regulations have been restructured into 11 chapters, comprehensively covering all critical aspects of the stock broker regulatory framework.
2) Lean schedules, better readability: Redundant schedules have been deleted, while relevant ones have been integrated into chapters to improve clarity and ease of understanding.
3) Registration forms via circulars: Broker registration forms will now be prescribed through Sebi circulars, framed in consultation with the Industry Standard Forum.
4) Streamlined Structure: Duplicate and repetitive provisions have been removed, with better consolidation of rules relating to underwriting, code of conduct and permitted broker activities.
5) Clearer definitions: Key definitions such as clearing member, professional clearing member, proprietary trading member, proprietary trading and designated director have been amended to remove ambiguity.
6) Ease of compliance measures: New provisions allow for joint inspections and maintenance of books of accounts in electronic form, supporting ease of doing business.
7) Revised ‘Qualified Broker’ criteria: The criteria for identifying qualified stock brokers has been rationalised, bringing brokers with large active client bases and higher trading volumes under enhanced supervision.
8) Shift in Reporting Responsibility: Stock exchanges will act as first-line regulators, with brokers required to report non-compliance, submit financials and intimate record-maintenance details to exchanges.
9) Removal of obsolete provisions: Historical and non-applicable provisions—such as those related to physical share delivery and Forward Market Commission sub-brokers—have been eliminated.
10) Sharper drafting, smaller rulebook: The regulations have been simplified and condensed, cutting pages from 59 to 29
11) Trimmed wordcount: The word count has been reduced from existing 18,846 words to 9,073 words.
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