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New Rules for Broker Net Worth
India's market regulator, Sebi, is proposing a new way to calculate stock broker net worth, aiming to strengthen financial safety. This update replaces the old method, which is less effective now that client money is moved upstream to clearing corporations. This shift meant client funds were no longer largely held by individual brokers, making the old net worth calculations less relevant.
Sebi aims for a stronger 'second line of defence' that matches a broker's operational scale and risks. The proposed calculation is variable, including 10% of clients' average credit balances over the last six months. Brokers will need ₹50 lakh for 10,000 to 50,000 active direct clients, plus an extra ₹50 lakh for every additional 50,000 clients. A tiered structure is also suggested for clients acquired through authorized persons, starting at ₹5 lakh for up to 2,500 clients.
Industry players expect these changes to ensure brokers with more clients hold proportionally higher financial buffers. The proposal follows recommendations from a working group including representatives from the National Stock Exchange of India (NSE) and BSE, as well as broker groups. Sebi is seeking public feedback on the draft rules, with comments due by May 15, 2026.