Sebi Proposes Significant Relaxations in Reporting Requirements for Stock Brokers

The Securities and Exchange Board of India (Sebi) has suggested easing reporting norms for stock brokers. This includes exempting certain demat accounts held by brokers who are also primary dealers from tagging requirements. Sebi's draft circular proposes that only bank accounts used for stock broking activities need to be reported by brokers that are banks or primary dealers.

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Under current regulations, brokers must maintain properly named and tagged bank and demat accounts. They are also required to report the opening and closure of these accounts to stock exchanges. However, some exemptions were previously granted to brokers that are banks. Sebi now proposes further relaxations in these norms.

Proposed Changes in Reporting Norms

Sebi's draft circular suggests removing the requirement for brokers to report certain demat accounts. Instead, depositories will directly share details of demat accounts opened or closed by stock brokers with the relevant stock exchanges. This will be done through a mechanism jointly decided by them.

Stock brokers must continue ensuring that all new bank and demat accounts are appropriately named according to prescribed nomenclature. Details of newly opened bank accounts should be reported to stock exchanges within one week of opening, while closures must also be reported within the same timeframe.

Public Comments Invited

Sebi is inviting public comments on these proposed relaxations until March 6. The aim is to streamline processes and enhance the ease of doing business for stock brokers. The feedback will help Sebi finalise the changes in reporting norms.

According to Sebi's proposal, all demat accounts maintained by stock brokers should be tagged appropriately. However, this requirement will not apply to demat accounts used exclusively for activities other than stock broking by brokers who are also primary dealers.

The draft circular emphasises that stock brokers who are also banks or primary dealers should report only those bank accounts used for their stock broking activities. This change aims to simplify compliance requirements for such entities.

Sebi's initiative reflects its ongoing efforts to make regulatory compliance more efficient for market participants. By reducing unnecessary reporting obligations, Sebi seeks to foster a more conducive environment for business operations in the financial markets.

With inputs from PTI