SEBI exploring graded compliance for brokers
SEBI Chairman Tuhin Kanta Pandey emphasizes the vital role of towns and villages in India's retail broking growth, highlighting the need for depth, trust, and technology in market participation with diversified investment options.
Securities and exchange board of India (SEBI) chairman Tuhin Kanta Pandey said on Saturday that alongside the big cities, town and villages will also play a major role in the next wave in retail broking. Addressing the broker community at Association of NSE Members of India (ANMI) Convention held in Mumbai, Pandey said that he sees three essentials for the future of Indian markets: depth, trust and technology. Apart from the wider reach, he also asked market participants to ensure deeper participation in the markets by offering investors choices beyond equity, such as bonds, real estate investment trusts (REITs) and infrastructure investment trusts (InvITs).
In order to win trust of investors, Pandey asked brokers to not just execute trades, but also guide their clients to understand their needs and risk appetite. “A client who understands risk invests wisely and stays invested longer. That is good for the client, for you and for the market,” he added. Pandey also cautioned the brokers about the impact of unregistered advisors and finfluencers on investor decisions and asked them to use their client interactions to explain risks, verified information, and flag frauds.
Commenting on the increasing number of trades driven by algorithms and the potential impact of cyber-attacks, Pandey asked brokers to treat cyber security as a business priority and test their systems by planning their responses to such events.
SEBI Chairman also highlighted the regulator’s roadmap to shape the future of the markets by combining simpler regulations, deeper markets, and responsible use of technology. He added that the regulator is working to achieve this by initiatives such as graded compliance for brokers based on scale, client exposure and reliance on technology, reviewing short selling and securities lending and borrowing mechanism (SLBM) to improve liquidity and price discovery, development of a market-making framework to boost secondary trading in bonds, development of a framework to prevent misuse of trading terminals, and finalizing the guidelines for the responsible use of artificial intelligence.
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