SEBI Unveils Broad Trading Rule Reforms
The Securities and Exchange Board of India (SEBI) has put forth a comprehensive plan to reshape trading rules for stock exchanges, signaling a move towards simplifying compliance and lowering operational costs. This initiative is part of the regulator's agenda to foster an easier business environment.
Consolidating Regulatory Framework
The proposed changes involve merging provisions from master circulars for stock exchanges and commodity derivatives. This consolidation aims to create a unified framework applicable across equity cash, derivatives, and commodity segments. The regulator intends to streamline disclosure requirements, mandating the dissemination of bulk deal information at the client level, linked to Permanent Account Numbers (PAN), to boost transparency without adding back-office burdens.
Margin Trading and Brokerage Requirements
SEBI is also proposing an increase in the minimum net-worth requirement for brokers offering margin trading facilities (MTF). The threshold is set to rise to ₹5 crore from the current ₹3 crore, with exchanges empowered to set even higher requirements. Timelines for submitting financial and auditor certificates will be aligned with reporting cycles, easing compliance pressure for market participants.
Revamping Market Making Schemes
A significant restructuring is planned for liquidity enhancement schemes (LES) and market-making activities. SEBI proposes integrating these into a single, principle-based framework applicable across all segments. This move aims to replace multiple approval layers with a simpler, half-yearly board review, eliminating the need for exchanges to submit regular effectiveness reports to SEBI.
Support for New Segments and Clarity
To bolster newer exchanges or segments, SEBI has suggested allowing incentives up to 25% of net worth for the first five years. This is conditional on safeguards against market manipulation and artificial volume inflation. The proposals also include clearer tabulation of rules for circuit breakers, price bands, and pre-open auctions, alongside the deletion of obsolete provisions and simplified rules for client code modifications.