Minimum capital deposit for stock brokers hiked to Rs 50 lakh
Market regulator Sebi today increased the minimum capital deposit required to be maintained by a stock broker to up to Rs 50 lakh, from a maximum of Rs 10 lakh earlier, to safeguard against any risks posed by them to the overall market.
The Base Minimum Capital (BMC) is the deposit maintained by the member of a stock exchange against which no exposure for trades is allowed and these deposits were last hiked by Sebi nearly 16 years ago in 1996.
These are meant for meeting contingencies in any segment of the exchange and are commensurate with the risks that the broker may bring to the system.
Announcing the increase and other changes in the BMC requirements, which would be implemented by March 31, 2013, Sebi today said the market structure has undergone significant structural changes over the years.
"The various technological changes and the increased speeds of trading have brought to fore the greater quantum of risks arising during the course of execution of transactions. Hence based on deliberations at various forums, it has been decided to review and enhance the BMC requirement," it said.
As per the revised BMC framework, it would be enhanced for members holding registration as 'stock-broker' in cash segment, while BMC would also be introduced for members holding registration as 'trading member' in any derivative segment.
Sebi has proposed a higher BMC requirement for those using high-frequency algorithmic trading facilities, while the deposits would be comparatively lower for the trading members indulging in only proprietary trading.
The new BMC deposit requirements,
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