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SEBI Launches Consultation on Revamped Stock-Broker Regulations

Stakeholders have until September 3 to comment on embedded algorithmic-trading definitions, foreign portfolio investor reforms, tighter governance proposals.

Sebi is aiming to loosen regulations for foreign investors, said Reuters.
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Overview

  • SEBI's consultation paper would embed formal definitions for algorithmic and proprietary trading into the core stock-broker regulations and clarify Execution Only Platform and Professional Clearing Member provisions.
  • The draft seeks to rationalize compliance for a class of low-risk foreign portfolio investors by simplifying onboarding requirements and easing procedural hurdles to attract long-term capital.
  • Proposals would grant brokers direct access to the Negotiated Dealing System–Order Matching platform for government securities trading and permit separate business units at GIFT-IFSC.
  • Governance enhancements include requiring at least one director to reside in India over 182 days a year, strengthening client-fund protections and mandating robust cybersecurity and internal controls.
  • The regulator has called for public feedback on the draft amendments by September 3, 2025, as part of a broader push following a surge in enforcement actions and market penalties in 2024–25.