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SEBI New Rules: SEBI has provided significant relief to stockbrokers. SEBI believes that stockbrokers’ mistakes should not be considered penalties. Now, they will no longer face hefty fines for minor infractions.
SEBI New Rules : The Securities and Exchange Board of India (SEBI) has made a major change for the stock market. SEBI has taken a step forward to ease compliance and as a major reform towards the market. SEBI has finalized several major reforms for stock brokers and stock exchanges.
SEBI has decided to rationalize and standardize the penalty framework applicable to stock brokers. Under the new rules, both the number and severity of penalties imposed on brokers will be reduced. SEBI has made this announcement to take a step forward towards Ease of Doing Business.
According to a report in Business Line, SEBI Chairman Tuhin Kant Pandey said that before formulating the new rules, the regulator held extensive discussions with stockbrokers and consulted them, following which the new rules were formulated. SEBI has decided that minor and minor mistakes by brokers will no longer be considered a penalty. Instead, they will be called “Financial Discrepancy.” This means that minor mistakes will no longer attract heavy penalties.
Penalties will be imposed in only 90 cases instead of 235.
According to media reports, a total of 235 existing penalty items were reviewed under SEBI’s new system. Of these, 40 penalties were completely eliminated, while 105 minor procedural lapses and technical errors have been classified as “Financial Disincentives.” After this, penalties will now apply only to 90 violations. SEBI has amended 36 penalties. In 7 cases, only a warning or advice will be issued for the first offense. In 6 cases, the maximum penalty limit has been set. No changes have been made in 29 cases. 12 new penalty provisions have been added.
Relief for Technical Glitches
Technical glitches in the market, such as order processing or system errors, often resulted in penalties for brokers. Under the new rules, penalties for such technical issues will be significantly reduced, thus reducing unnecessary pressure on brokers.
The term “penalty” will not be used everywhere.
SEBI states that the term “penalty” is often associated with “stigma” or “punishment,” which can impact a broker’s reputation. Therefore, in cases of technical or procedural errors, the term “financial disincentive” will now be used instead of “penalty.” SEBI has also clarified that penalties imposed by different exchanges for the same error will be avoided. According to SEBI’s system, only the lead exchange will take action in such cases, so that brokers do not face multiple penalties for the same mistake.
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