SEBI Approves Comprehensive Overhaul Of Stockbroker Regulations

Markets regulator SEBI has approved a comprehensive overhaul of its stockbroker regulations, replacing the more than three-decade-old framework with a new set of rules aimed at easing compliance and aligning oversight with evolving market practices.

The move seeks to simplify regulatory language, remove outdated provisions, and introduce clearer definitions and streamlined reporting requirements.

'The Board approved the proposal to replace the Sebi (Stock Brokers) Regulations, 1992 with the SEBI (Stock Brokers) Regulations, 2025 (SB Regulations),' the regulator said in a press statement after its board meeting.

Under the new framework, the SB Regulations have been structured into eleven chapters, comprehensively covering key aspects of the regulatory regime for stock brokers.

As part of the restructuring, SEBI has deleted certain schedules that are no longer required and integrated relevant ones directly into the regulations as chapters to improve readability and understanding.

In addition, the overall structure has been streamlined through the removal of repetitive provisions and the consolidation and re-arrangement of sections relating to underwriting, code of conduct, and other activities permitted for stock brokers.

To further enhance clarity, the board has amended several key definitions, including those relating to clearing member, professional clearing member, proprietary trading member, proprietary trading, and designated director.

The regulator has also modified and introduced provisions aimed at easing compliance and improving ease of doing business, such as allowing joint inspections and permitting the maintenance of books of accounts in electronic form.

Separately, the board has rationalised the criteria for identifying qualified stock brokers, ensuring that entities with a large number of active clients or higher trading volumes are brought under enhanced supervision and compliance requirements.

Reflecting the role of stock exchanges as the first-line regulators, SEBI has revised reporting obligations, including the reporting of non-compliance, submission of financial statements, and intimation of the place where books of accounts are maintained.

At the same time, the regulator has decided to remove obsolete and non-applicable provisions, such as those related to physical delivery of shares, the Forward Market Commission, and sub-brokers.

Highlighting the extent of simplification, SEBI said the drafting has been done to enhance ease of reading and understanding, with the total number of pages reduced from 59 to 29, and the word count cut from 18,846 to 9,073.

'The SB regulations are expected to enhance ease of compliance by ensuring simplified language and overall structured provisions, updated with the continually evolving compliance requirements,' SEBI said.

The overhauled SB regulations have factored in the suggestions received in the public consultation floated in August.