SEBI, the regulatory authority for securities in India, has unveiled updates to its guidelines aimed at enhancing market integrity and protecting investors.
According to Busienss Standard, the amendments, announced on Thursday under the Sebi (Stock Brokers) (Amendment) Regulations, 2024, compel stock brokers to adopt robust systems for monitoring trading activities and to implement a whistle-blower policy. These systems are designed to prevent and detect potential fraud and market abuse.
The newly mandated surveillance systems and internal controls will be tailored based on the size of the broker, reflecting Sebi’s tailored approach to compliance. The brokers with over 50,000 active Unique Client Codes (UCCs) must meet these standards by January 1, 2025.
Those with 2,001 to 50,000 active UCCs have until April 1, 2025, and those with fewer than 2,000 UCCs have been given until April 1, 2026. Additionally, qualified stock brokers, who are already subject to governance standards due to existing obligations, must comply by August 1, 2024.
The guidelines and operational modalities for implementing these new requirements will be developed by the broker’s Industry Standards Forum (ISF) in consultation with Sebi. This cooperative approach ensures that the policies are both practical and effective, tailored to the realities of the market.
In terms of communication and enforcement, Sebi has directed stock exchanges to disseminate the updated regulations on their platforms and ensure that brokers are well-informed of their new obligations. The exchanges are also required to update their bye-laws accordingly and collaborate with the ISF to issue joint notices about the applicability dates, ensuring a unified approach across the industry.
This staggered, risk-based implementation timeline is designed to provide brokers with adequate time to adapt and align their operations with the new standards, thereby ensuring a smoother transition and more effective compliance.
“Sebi is committed to ensuring a secure and robust trading environment that instils confidence among investors,” Sebi CEO Ajay Tyagi said, “These amendments are a step forward in our ongoing efforts to safeguard market integrity and protect investors from financial misconduct.”
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