Latest news with #QSBs
Mint
6 days ago
- Business
- Mint
Mint explainer: Sebi moots reboot of 1992 broker rulebook
The Securities and Exchange Board of India (Sebi) has issued a consultation paper proposing a ground-up rewrite of the 1992 Stock Brokers Regulations to simplify compliance, codify key circulars, and align the rules with today's tech-driven markets. It has invited public comments until 3 September. Mint breaks down what changes most for brokers, investors, and markets. What are the proposed definitions? Sebi has included definitions of 'algorithmic trading', which is order generated using automated execution logic and 'execution only platform (EOP)', a digital/online platform that facilitates subscription, redemption and switch transactions in direct plans of mutual fund schemes. Sebi also deleted the definition of a 'small investor' as the threshold of ₹50,000 was considered an outdated classification. Legal experts who advise brokers believe the proposed definitions may be too broad or missing out on spelling out exceptions. Sonam Chandwani, managing partner of KS Legal, said the proposed algorithmic trading definition is so broad that it risks capturing everything from basic order-routing tools to high frequency trading (HFT). 'This approach could subject low-risk participants to disproportionate compliance obligations designed for far more sophisticated and potentially disruptive trading systems." Chandwani said. How will registration and governance change? Sebi's consultation paper has specified that at least one designated director must be resident in India (182+ days per financial year) for broker-companies at registration consideration. It also specified that brokers must intimate Sebi (via an exchange) and other market infrastructure institutions (MIIs) of any 'material change" in registration information, not just change in control. Change-in-control approvals are to be routed through an exchange. Lawyers said the new 'material change" intimation will raise compliance overhead and may trigger disputes unless Sebi/exchanges clearly define scope, timelines, and formats through circulars. 'What is material change has not been defined in the proposed regulations. This additional requirement may increase the compliance burden on brokers, and the absence of a clear definition for 'material change' could lead to differing interpretations and potential disputes," said Akshaya Bhansali, managing partner at Mindspright Legal. What is changing for large brokers designated as QSBs? Sebi has proposed to rely on size/scale metrics only for Qualified Stock Brokers (QSB) designations. The metrics will now include active clients, client assets held with the broker, trading volumes, end-of-day client margin obligations, and proprietary trading volumes. Compliance and grievance scores, Sebi suggested, will not be qualifying criteria, as it puts additional burden of compliance on an aspect that is already monitored. Experts said this move is essential. 'While these requirements do increase compliance and operational costs, the large customer bases and high transaction volumes handled by QSBs make it essential for ensuring transparency and maintaining the credibility of market intermediaries," said Prakarsh Gagdani, chief executive officer (CEO) at Torus Digital. However, Narinder Wadhwa, managing director & CEO of SKI Capital Services Ltd, said the debate of compliance burden for QSBs being proportionate or overly stringent remained, potentially affecting competitiveness. How is recordkeeping and digitisation being streamlined? Sebi has proposed permitting electronic maintenance of books or records, essentially removing physical-security-era requirements, which includes paper contract note copies. Brokers must inform exchanges (not Sebi directly) where books/records are maintained, Sebi said, aligning submissions and communication through the exchanges. 'Changes in documentation, compliance technology, and reporting structures could require significant investment. There could be possible shifts in client onboarding norms, record-keeping formats, and real-time reporting obligations", Wadhwa said. How will fees and net worth requirements change? The consultation paper removes references to the outdated 1990s transition-year and has standardised fee payment processes and timelines through exchanges and online gateways. Exchanges collected these fees segment-wise. Sebi also proposed to remove the fixed base net worth and the formula-based variable net worth in the current regulations tied to client cash balances at brokers. The regulator reasoned that the provisions became less relevant after it introduced the mandatory upstreaming of client funds to clearing corporations. Through this, the investors' clear credit balances are transferred by the broker to the clearing corporation every day. Experts said the absence of clarity on how 'variable net worth" will be computed created uncertainty for capital planning. 'The shift of variable net worth to circulars means Sebi can change the formula quickly. Helpful if upstreaming lowers balances, but risky if they widen what counts. Large brokers can absorb swings; smaller ones may face sharper, less predictable capital demands", Ajay Kejriwal, executive director at Choice Equity Broking, said. What is the new power to relax strict enforcement? The regulator proposed an enabling provision to relax strict enforcement in specified circumstances such as undue hardship, procedural or technical issues, factors beyond control, and non-relevance for a class. It proposed including a mechanism for confidential treatment of requests or responses for up to 180 days. Legal experts said the discretion seemed inherently subjective. 'Without clearly defined parameters, market participants may challenge decisions as being arbitrary. Further, the provision allows for confidential treatment of such requests and Sebi's responses. So, such relaxations will not be in the public domain for up to 180 days (or not at all if withdrawn)", Bhansali said. Chandwani echoed the view and said that without precise criteria and published interpretive guidance, this flexibility could fuel interpretational uncertainty and litigation. Will inspections increase or be better coordinated? Beyond Sebi's inspection powers, recognised stock exchanges, clearing corporations, and depositories may conduct inspections as per their by-laws, the consultation paper said. Sebi and MIIs will be allowed to conduct joint inspections, aiming to avoid multiple duplicative checks. Lawyers said without a clearly defined jurisdictional hierarchy, regulated entities could be subjected to overlapping inquiries into the same issues. 'This not only creates procedural inefficiency but also heightens the risk of conflicting conclusions between authorities", Chandwani said. What timelines and operational impact should brokers expect? Industry sources note that adaptation windows for paperwork/policy updates could be a few months, with longer lead times for tech/algo controls and full QSB governance uplift; Sebi historically staggers implementation via circulars and master circular updates. 'Most brokers could adapt in six months for paperwork and policy updates, nine months for tech/algo compliance, nine months for full QSB governance upgrades, with likely phased timelines for any new net worth formula, giving smaller brokers extra breathing room", Kejriwal said.
Mint
03-05-2025
- Business
- Mint
Stock market this week: THESE stocks soared while others sank
The Securities and Exchange Board of India (SEBI) has extended the deadline for Qualified Stock Brokers (QSBs) to implement the optional T+0 rolling settlement cycle in Equity Cash Markets from May 1, 2025, to November 1, 2025. This extension follows feedback from QSBs and discussions with market participants to ensure smooth implementation. All other provisions of the December 10, 2024 circular remain unchanged. Market Infrastructure Institutions must update systems, amend regulations as needed, and inform market participants accordingly. This initiative is part of SEBI's broader efforts to enhance market efficiency, reduce settlement timelines, and align operational processes with international standards. The Securities and Exchange Board of India (SEBI) has expanded the automated trading window closure system under the Prohibition of Insider Trading (PIT) Regulations to include immediate relatives of designated persons (DPs) in listed companies. Effective from July 2025 for the top 500 listed companies and from October 2025 for all others, this move aims to enhance compliance and transparency by preventing insider trading during restricted periods. Companies must ensure system-driven monitoring of trading restrictions for both DPs and their immediate relatives. The initiative reflects SEBI's continuous focus on strengthening governance, ensuring accountability, and building investor trust in capital markets. Ather Energy's initial public offering (IPO) was oversubscribed by 1.50 times, indicating strong investor interest and demand exceeding the number of shares offered. This means that for every share available, investors applied for 1.5 shares. The oversubscription reflects positive market sentiment and confidence in Ather Energy's growth prospects, likely driven by its position in the growing electric vehicle sector. Such a response can also lead to a higher listing price or allotment on a pro-rata basis to investors. Analysts attribute this demand to the company's innovative products, expanding distribution network, and increasing demand for sustainable mobility solutions. Several major asset management companies including HDFC, Bajaj, Groww, Motilal Oswal, Edelweiss, DSP, and UTI have introduced new fund offerings. These NFOs span diverse investment categories including debt index, Nifty indices (Next 50 and Nifty 50), gilt funds, infrastructure, internet economy index, silver ETF fund of funds, and multi-cap growth plans. All offerings are direct growth plans, providing investors with a wide range of options across various sectors, asset classes, and investment strategies to diversify their portfolios. Investors can access these offerings through multiple channels, enabling flexibility, transparency, and ease of participation in different market segments. Index Returns Best Performers Worst Performers Bought and Sold Most Watchlisted Kuvera is a free direct mutual fund investing platform. Unless otherwise stated data sourced from BSE, NSE and kuvera. First Published: 3 May 2025, 10:44 AM IST
Time of India
29-04-2025
- Business
- Time of India
Sebi extends deadline for optional T+0 settlement for QSBs to Nov 1
Capital markets regulator Sebi on Tuesday extended the timeline for implementation of the optional T+0 rolling settlement cycle for qualified stock brokers (QSBs) to November 1. Earlier, the deadline for operational readiness as mandated under the December 10, 2024 circular was May 1, 2025. The extension came after Sebi received feedback from QSBs and subsequent consultations with stock exchanges, clearing corporations, depositories and the brokers themselves. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Co-Founder of Google Brain, Andrew Ng, Is Reported To Have Read Every... Blinkist: Andrew Ng's Reading List Undo "In order to ensure smooth implementation, it has been decided to extend the timeline for QSBs for putting in place the necessary systems and processes for enabling seamless participation of investors in optional T+0 settlement cycle, to November 1, 2025," the Securities and Exchange Board of India (Sebi) said in a circular. Sebi's earlier framework said "stock brokers who are designated as QSBs and meet the parameter of minimum number of active clients for qualification as QSB as on December 31, 2024 shall put in place necessary systems and processes for enabling seamless participation of investors in optional T+0 settlement cycle". Further, new QSBs have three months to adopt these systems after any list updates. Live Events While extending the deadline, the regulator clarified that all other provisions of the December 10, 2024 circular will remain unchanged. Sebi has directed market infrastructure institutions (MIIs) to make necessary amendments to relevant rules and byelaws, implement the new provisions, and disseminate the information widely to market participants and investors. In December last year, Sebi expanded the optional T+0 (same day) settlement in the equity cash market to the top 500 scrips by market capitalisation. The Securities and Exchange Board of India (Sebi) introduced an optional T+0 settlement cycle for 25 scrips in March 2024. Initially, it was available only to non-custodian clients.
Mint
22-04-2025
- Business
- Mint
Brokers seek time to prepare for same day settlement
Retail investors' dreams of settling their trades on the same day that transactions occur aren't likely to materialise significantly more than a year after the Securities and Exchange Board of India ( Sebi ) launched the same-day settlement cycle, or T+0. At a meeting last week, close to 10 qualified stock brokers (QSBs) requested that market regulator Sebi extend the 1 May deadline for offering a same-day settlement option to any of their clients desirous of such a cycle. As most top brokers are operationally unprepared for such a cycle, Sebi could extend the deadline for the QSBs to provide their clients with the option of same-day settlement. Currently, very few brokers offer this option to clients as their risk management and order management systems cannot handle the scale for a same-day settlement. Read more: Why India's collective investment tax rules need an overhaul "Most QSBs requested the regulator to stretch the 1 May deadline by three to four months to become operationally fully prepared for offering clients the option for completion of trade on the same day," said a QSB official aware of the meeting. "I think Sebi could grant us more time to get our systems fully geared for same-day settlement," said the head of another QSB. He added that the current settlement cycle of T (trade) plus one—where shares hit a client's demat account and money is credited to the seller's account a day after the trade—was "very popular" among market participants. An email query to Sebi on whether the deadline for QSBs would be extended was not answered till press time. However, a person aware of the development said that Sebi is not mandating "universal adoption," but is still closely monitoring several issues, such as "FPI participation and custodian readiness." To be sure, India became the first country to implement a T+1 settlement cycle for all listed stocks on 27 January 2023. On 28 March 2024, a year later, Sebi introduced the optional T+0 settlement. In the first phase, trades by retail investors between 9:15 am and 1:30 pm are considered for same-day settlement by 4:30 pm, according to ICICI Securities . Gradually, trading hours will be extended to 3:30 pm, in line with the regular market hours from Monday to Friday. In the second phase, institutional investors will also have the option to trade under the T+0 cycle. While initially applicable to just 25 scrips, Sebi announced on 10 December 2024 that the optional T+0 settlement would be extended to the top 500 stocks from 31 January 2025, starting with scrips at bottom 100 companies and gradually include the next bottom 100 companies every month till the top 500 companies are available for trading in optional T+0 settlement cycle. Currently, investors can trade in over 5,600 listed stocks. Read more: Sebi plans raising MF exposure limit in REITs, InvITs; experts flag tax concerns The regulator also clarified that entities meeting the QSB criteria—based on minimum active clients and other parameters—must put in place necessary systems and processes to enable seamless investor participation in the optional T+0 cycle. Additionally, Sebi directed stock exchanges to implement a new 'Block Deal window" exclusively for the morning session from 8:45 am to 9:00 am, in addition to the existing windows from 8:45–9:00 am and 2:05–2:20 pm for T+1 settlements. 'The trades in the optional T+0 block window session will be settled on the T+0 settlement cycle," Sebi clarified. The QSB and block deal parameters are to come into effect from 1 May 2025. QSBs are brokers who hold a significant position in Indian stock markets based on their size, trading volumes and amount of client funds handled by them. QSBs include brokers like Groww, Zerodha, Upstox, Angel One , ICICI Securities , HDFC Securities, Kotak Securities, Motilal Oswal Financial Services , etc. The fact of lacklustre same day settlement trading is borne by just one share of SBI being traded on BSE on Monday against 6.98 lakh being traded under the T +1 settlement cycle. On BPCL it was just 2 under T+0 zero versus 4.5 lakh under prevalent settlement and in Tata Communications just 2 shares against 32,000, per BSE data. As of FY25, there were 397 brokers handling 4.92 crore active clients of NSE, the country's largest stock exchange. The benefits of same-day settlement include increased trading opportunities and reduced settlement risk for investors. Rolling settlement was introduced on a T+3 basis in 1993, followed by a T+2 settlement cycle in 2003. Sebi implemented the existing T+1 settlement in January 2023. Currently, buying in one settlement cycle and selling in the other is not possible.
