The Securities and Exchange Board of India (Sebi) has proposed easing reporting norms for stockbrokers, extending key exemptions to those that double up as primary dealers in a bid to improve ease of doing business.
In a consultation paper issued on Friday, the markets regulator has sought to relax certain requirements around naming, tagging, and reporting of bank and demat accounts maintained by stockbrokers. The proposal seeks to align the treatment of brokers that are also primary dealers with the exemptions already available to brokers that also operate as banks.
The changes build on provisions introduced under Sebi’s Master Circular for Stock Brokers dated 17 June 2025, which strengthened supervision by mandating a clear nomenclature for all bank and demat accounts and requiring brokers to report the opening and closure of such accounts to stock exchanges.
Draft proposal
While the intent was to enhance transparency and regulatory oversight, market infrastructure institutions later flagged operational overlaps, particularly for entities that undertake multiple regulated activities under one umbrella.
Under the existing framework, brokers are required to appropriately tag all demat accounts and inform stock exchanges about their bank and demat accounts—both existing and newly opened. However, brokers that are also banks were given limited relief: They needed to report only the bank accounts used for stock broking activities, not their entire banking book.
The draft circular now proposes to extend similar relief to brokers that are also primary dealers. Specifically, demat accounts used exclusively for activities other than stock broking by such entities would be exempt from the tagging requirement. In effect, accounts tied to their primary dealership or other non-broking functions would fall outside the reporting net applicable to broking operations.
Further, brokers that are banks or primary dealers would only be required to report bank accounts used for stock-broking activities to stock exchanges. This narrows the scope of disclosure and avoids duplication where the same entity is already subject to oversight in another regulatory capacity.
The regulator has invited comments on its suggestions until 6 March.
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