SEBI Mulling ‘One Event, One Penalty’ Rule For Brokers, Sources Say
SEBI is in discussions with stock exchanges to implement a uniform penalty system that would prevent brokerage firms from being fined multiple times for a single violation, sources say.
The market regulator, the Securities and Exchange Board of India, is working on a new penalty system that would prevent brokerage firms from facing multiple fines for the same violation, according to people familiar with the matter.
The proposal, under discussion for the past year, aims to stop different exchanges from imposing separate penalties for a single default, the people told NDTV Profit on the condition of anonymity, adding that the market regulator is in talks with stock exchanges to implement the rule, which would reduce the penalty burden on brokers.
One of the sources that NDTV Profit spoke to mentioned that currently the brokerage firms end up facing stringent penalties for violations in a multifaceted manner, and hence such a framework has been under consideration for a while but there is no fixed timeline yet for this to roll out.
Under the current system, if the brokers default by failing to report a technical glitch on time, not settling client funds, failing to resolve investor complaints or in case of any other regulatory violation, all the bourses in the country can penalise a brokerage.
This is why, the sources said, the regulator is looking to enhance the ease of doing business for the brokers and working on the penalty issue with the exchanges.
An email with queries regarding this has been sent to the regulator and the story will be updated if a response is received.
