Summary of this article
Sebi has revamped over 3-decade old stockbroker rules
Allowed joint inspections
The Securities and Exchange Board of India (Sebi) has revamped the over three-decade old stockbroker rules in a bid to ease compliance and promote ease of doing business. The overhaul will allow stockbrokers to carry out activities under the framework of other financial regulators. The amended rule will replace the 1992 regulations to make it more simplified, remove outdated provisions and make definitions clearer.
Sebi said in a notification on January 7, 2026: "A stockbroker 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."
The new regulations have been structured into 11 chapters which comprehensively cover key aspects of regulatory scope for stockbrokers. Stockbrokers and clearing members will now be governed under the new rules aimed at modernising the regulatory framework in line with the changing market practices, while ensuring simpler compliance and more transparent rules.
Sebi has also updated 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’ will imply trading by a broker in his/her own account in any segment of a recognised stock exchange. Elsewhere, ‘proprietary trading member’ is defined as a broker whose trades are exclusively in a proprietary trading nature.
Sebi also introduced provisions to allow joint inspections and permitting maintenance of books of accounts in electronic form in order to ease compliance norms and promote ease of doing business.
"The Board, along with the recognised stock exchange, clearing corporation or depository, may conduct a joint inspection of the stockbrokers 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.
Sebi has also rationalised the criteria to identify qualified stockbrokers. This will ensure that entities with a large active client base or with higher trading volumes are also brought under the scanner of enhanced supervision and compliance norms.
In addition, Sebi has revised reporting obligations, including reporting of non-compliance. This is to establish the role of Sebi as the first line regulator; it has also required the reporting and submission of financial statements, intimation of the location where books of accounts of an entity is maintained.
At the same time, Sebi has done away with obsolete provisions, such as those related to the physical delivery of shares, the Forward Market Commission, and sub-brokers. The consolidated regulations reduce the total number of pages to 29 from 59 earlier, and reduce the work count to 9,073 from 18,846.
