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May 30, 2024

SEBI Accelerates Internet-Based Trading Approvals to Boost Market Efficiency

In a significant move aimed at enhancing the ease of doing business, the Securities and Exchange Board of India (SEBI) has announced a reduction in the approval time for stock brokers seeking to offer internet-based trading services. Effective immediately, stock exchanges will now grant these approvals within seven days, a sharp decrease from the previous 30-day timeframe.

The streamlined approval process is designed to facilitate quicker market entry for brokers, thereby supporting the growth and efficiency of internet-based trading. Stock brokers seeking to provide these services must apply to their respective stock exchange, which is now mandated to respond within a week, according to SEBI’s latest circular.

This regulatory change underscores SEBI’s commitment to modernizing market operations and promoting a more dynamic trading environment. Internet-based trading allows clients from any part of the country to execute trades via brokers’ internet trading systems, using order routing systems that channel client orders directly to exchange trading systems for execution.

In addition to speeding up the approval process, SEBI has also made significant changes regarding the reporting and confirmation of internet-based trading (IBT) statistics. Previously, stock brokers were required to periodically confirm their IBT statistics before publication by stock exchanges. This requirement has now been abolished. Instead, exchanges will publish IBT statistics based on the details provided by stock brokers regarding their IBT terminals. Exchanges are authorized to obtain necessary information or declarations about IBT terminals from stock brokers as they see fit.

These adjustments come in response to requests from the Industry Standard Forum (ISF) of stock brokers, highlighting the industry’s need for a more efficient regulatory framework to accommodate the growing demand for internet-based trading services.

SEBI’s decision to implement these new guidelines immediately reflects its proactive approach in addressing industry concerns and fostering a more responsive regulatory environment. By reducing administrative bottlenecks and enhancing operational transparency, SEBI aims to bolster investor confidence and stimulate market participation through improved access to trading services.

The implications of these changes are far-reaching. By shortening the approval period, SEBI not only accelerates the process for brokers to start offering internet-based trading but also potentially increases the overall trading volume and liquidity in the markets. This move is expected to attract more participants, including retail investors, who can now leverage internet-based platforms for convenient and efficient trading.

Furthermore, the elimination of periodic IBT confirmation requirements reduces the administrative burden on stock brokers, allowing them to focus more on client services and market operations. This simplification of processes aligns with global best practices and supports SEBI’s broader objective of creating a robust, technology-driven trading ecosystem in India.

In summary, SEBI’s latest initiatives mark a significant step towards enhancing the operational efficiency of stock exchanges and facilitating a more agile and competitive trading environment. The reduction in approval time for internet-based trading and the overhaul of IBT statistics reporting are poised to drive greater innovation and participation in the Indian stock markets, positioning them for sustained growth and development.

Read more latest news related news on R9 News

Jhumpa Lahiri

Jhumpa Lahiri

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