New -Delhi: The Government has alleviated the compliance of brokers for stocks and commodity markets by providing clarity on investments that do not involve customer money. The Department of Economic Affairs (DEA), the Ministry of Finance, has amended Rule 8 of the Rules for Security Contracts (Regulations), 1957, to make it clear that any investments made by a member (broker) are not treated as an operating activity unless such investments on Monday involve a financial liability for the broker, according to a notice of Monday. Rule 8 of the Security Contracts (Regulations) Rules, 1957 (SCRR), limits brokers to engage as principal or employee in any enterprise other than securities or commodity derivatives. However, according to the rule, they can act as brokers or agents in other businesses, provided such roles do not hold personal financial accountability. “This (change) opens the room for brokers to easily utilize their own funds for different purposes, to buy assets, etc., which used to be a time -consuming case,” said Rajesh Palviya, SVP, Axis Securities. “One of the reasons for the government that facilitates the rules is the strict norms for financing the client margin,” says Palviya. “Below, the broker must collect a preceding 20% boundary from clients who want to trade shares on an intraday base. Since the space for the wrong utility of customer funds has already been sharpened, there was a thinking that this rule had to be relieved.” The industry had concerns about the interpretation of Rule 8, which prescribes the suitability criteria for membership in stock exchanges. “After taking note of the concerns raised by various stakeholders about certain provisions in the said rules, the DEA released a consulting document in September 2024 and invited the comments of stakeholders,” the ministry said in its statement. “Given the growth in the scope and interconnectedness of the financial sector and the evolution of the nature of brokers over time, the DEA feels it necessary to review the appropriateness of precautions embedded in the rules, so that the setting of the rules is served without limiting the activities of the stakeholders,” it added. The amendment, issued by a newspaper notice, follows stakeholders’ consultations and joins the broader striving of the government to simplify the regulations of the financial sector. “The amendment was carried out after the proper consideration of the feedback from the stakeholders and is part of the broader government’s emphasis to provide the clarity of the regulatory level and increase the ease of business in the financial sector,” the Ministry of Finance Ministry states. “This will ensure that market intermediaries continue to support the development of India’s capital markets in a transparent and well -regulated way.” By updating the rule, the government aims to reduce the compliance burden and facilitate the smooth functioning of market intermediaries, while maintaining the transparency and investor protection. The reform is seen as part of India’s ongoing efforts to modernize its capital market ecosystem and attract greater participation.
Center -adjustment supply to facilitate compliance with brokers
