SEBI stock broking norms to get biggest overhaul since 1992: Sources

Capital market regulator SEBI is likely to discuss major changes to stock broking regulations in its next board meeting, according to sources. This could mark the biggest overhaul in these norms since 1992. Enacted through the SEBI Act, the stock broking regulation came into force on January 30, 1992, roughly three years and nine months after SEBI's initial establishment.

Officials are considering significant changes to mutual fund and stock broking norms under this reform drive, including the possibility of levying separate research fees from broking charges for mutual funds, the sources said.

Stock broking in India is governed primarily by the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992, which lay down the framework for registration, net worth requirements, compliance standards and a code of conduct for brokers and sub-brokers. Over the years, SEBI has expanded and updated these rules through multiple circulars and amendments covering risk management, investor protection, segregation of client funds, online broking norms and enhanced disclosure requirements.

Add Zee Business as a Preferred Source

In October, SEBI invited public comments on its proposal to separate research fees from brokerage.

SEBI is also expected to make the cash market more attractive by amending short-selling norms and the Securities Lending and Borrowing Mechanism (SLBM) framework.

The regulator, the sources said, is reviewing measures taken with respect to derivatives and will continue a calibrated approach towards any changes in derivatives policy. “We cannot shut down everything,” one of the sources said.

In its last meeting in September, SEBI’s board approved a special framework called SWAGAT-FI for foreign investors and announced several steps to deepen the market. SWAGAT-FI is a single-window, lower-touch onboarding route for certain low-risk foreign portfolio investors (FPIs) and foreign venture capital investors (FVCIs), aimed at simplifying access and supporting stable foreign inflows.

The board also agreed to treat real estate investment trust (REIT) exposure in mutual funds more like equity to enable greater MF participation, and flagged additional measures to deepen REIT and InvIT markets.

Besides this, SEBI’s board—the regulator’s top decision-making body—approved changes to the anchor investor framework and IPO norms, merging certain allocation categories, expanding the pool of eligible anchor investors and tweaking allocation thresholds to increase anchor participation in large issues.

The SEBI board meets several times a year.