India’s capital market regulator is gearing up for a major clean-up of the rulebook for stock brokers. As per the Moneycontrol report, in a fresh consultation paper, the Securities and Exchange Board of India (SEBI) has floated proposals that could simplify regulations, cut compliance costs, and bring the decades-old framework in line with the Companies Act, 2013.
And for the first time, the rulebook might officially define what counts as ‘Algorithmic Trading’.
What this news means for brokerage firms
As part of this, the share price of major brokerage firms including Angel One, Motilal Oswal, Nuvama Wealth, and even the BSE were trading sharply higher in early deals.
In early trade, shares of Angel One are up over 3%, Motilal Oswal up 2%, Nuvama Wealth up over 1%, and BSE up nearly 4%.
The Nifty Capital Market index jumped over 1% with all its constituents in the green.
These changes, if implemented, could ease regulatory load for brokers.
Opening new doors – From G-Secs to GIFT City
As per the report, one of SEBI’s key proposals is to allow stock brokers access to the Negotiated Dealing System – Order Matching (NDS-OM) platform.
Traditionally reserved for banks and primary dealers, this system is used for trading in government securities.
Furthermore, the market regulator also wants to let brokers set up separate units for activities in the GIFT International Financial Services Centre (GIFT-IFSC). This potential will help in opening new opportunities in the offshore market space, the report added.
Bringing definitions up to date
The current Stock Brokers Regulations, first framed in 1992, do not define ‘Algorithmic Trading’. As these kinds of terms are growing dominance in the markets, SEBI now wants to change that by formally including a definition to cover all trades executed using pre-programmed instructions.
Other new definitions on the table include:
Execution Only Platform (EOP)- Online or digital platforms that let investors buy, redeem, or switch direct plans of mutual funds without advisory services.
Proprietary Trading- Trading done by a broker in its own account, clearly distinguished from trades executed for clients.
Apart from this, the market regulator paper also aligns with sub-regulations, removing duplication, and scrapping outdated provisions.
Stakeholders have until September 3, to submit feedback via SEBI’s online portal or email.