SEBI forms standards setting forum for brokers

The Securities and Exchange Board of India has formed an Industry Standards Forum on a pilot basis under the aegis of the stock exchanges to address the concerns of brokers, said a person familiar with the matter.

SEBI had first proposed the formation of such a forum in July. This was to be formed by industry associations and chaired by an industry leader. It was proposed that the forum would formulate standards for implementation of specific regulations and circulars, based on feedback from industry and stakeholders, in consultation with the regulator. The priority areas identified in August were requirements for rumour verification, disclosures under Sections 30 and 30A of LODR regulations, BRSR Core and ESG assurance, and structured digital database under insider trading norms.

Separately, the regulator recently set up a working group for brokers to facilitate ease of doing business, in what is part of a broader initiative being driven by the Centre.

The aim is to streamline compliance norms, reduce paperwork and reporting requirements, prune older regulations, ease KYC requirements and facilitate the move towards digitisation.

The regulator has effected a number of changes for brokers in the past year that have jacked up costs for them. It has directed brokers to settle running accounts of client funds on the first Friday of every quarter. The demat debit and pledge instruction mechanism has been introduced for transfer and pledging/ re-pledging of clients’ securities to curb the possible misuse of client’s power of attorney by stock brokers.

SEBI has modified the cyber security frameworks for brokers and laid out enhanced obligations for select qualified members. Upstreaming of clients’ funds and trading in the secondary market that involves blocking funds in an investor’s bank account, are being introduced in a phased manner.