Context:
The Securities and Exchange Board of India (SEBI) is reviewing and proposing reforms to its stockbroker regulations and brokerage norms that were originally framed decades ago (notably the 1992 Stock Broker Regulations), to modernise them for current market realities, including introducing clearer definitions (like for algorithmic trading) and stronger risk and compliance frameworks.
Authority:
- The SEBI Board, chaired by the SEBI Chairperson (currently Tuhin Kanta Pandey), is the decision-making body undertaking the review.
- Stockbrokers, intermediaries, and market participants are the primary stakeholders affected by these norms.
- The review and agenda discussion are taking place in December 2025, at a scheduled SEBI board meeting where these issues are being deliberated.
Reason for the Change:
- The existing broker norms are over three decades old and need updating to reflect modern market practices, technological developments (like algorithmic trading), and improved investor protection standards.
- The review aims to enhance market transparency, risk management, and compliance efficiency, ensuring the regulatory framework stays relevant with evolving financial markets.
- SEBI has issued consultation papers seeking public feedback on proposed changes to the Stock Brokers Regulations.
- The board meeting will deliberate on these proposals and possibly approve reforms or initiate amendments to the rules.
Q. With reference to the recent move by the Securities and Exchange Board of India (SEBI) to review decades-old brokerage norms, consider the following statements:
1. The review pertains to the Stock Brokers Regulations that were originally framed in the early 1990s.
2. The objective of the review includes aligning brokerage regulations with technological developments such as algorithmic trading.
3. The review is being undertaken jointly by SEBI and the Reserve Bank of India to harmonise capital market and banking regulations.
Which of the statements given above is/are correct?
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
Answer: a) 1 and 2 only
Explanation:
Statement 1 – Correct:
SEBI is reviewing the Stock Brokers Regulations, 1992, which are over three decades old.
Statement 2 – Correct:
A key reason for the review is to modernise regulations in light of technological changes, including algorithmic trading, enhanced risk management, and compliance norms.
Statement 3 – Incorrect:
The review is being carried out solely by SEBI, which is the statutory regulator for the securities market. The RBI has no direct role in framing brokerage regulations.
