Your Stock Broker Trading Platform Now Must Meet These Requirements; Sebi Enhances Trust Quotient In QSBs

To increase the trust of investors in the securities market, Sebi announced on March 11, 2024, that qualified stock brokers (QSBs) will be subject to more obligations and increased the compliance culture by revising the QSB framework. The number of parameters to qualify as a QSB has been increased from 5 to 8. All these parameters will come into effect from September 1, 2025. Now, grievance redressal the compliance scores and the proprietary trading volumes of a broker will also be taken into account while classifying stock brokers as QSBs, according to a circular.

Who Are QSBs?

Sebi defines QSBs as entities that handle a large volume of clients and trading and have a significant influence over the market. As many as 15 trading platforms were qualified as Qualified Stock Brokers (QSBs) as of July 1, 2023 which are Zerodha Broking, 5Paisa Capital, HDFC Securities, IIFL Securities, ICICI Securities, Motilal Financial Services, Kotak Securities, Angle One, Anand Rathi Share & Stock Brokers, Global Capital Market, Jainam Broking, Nextbillion Wealth and Investment, and RKSV Securities India.

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Background

At present, an entity would be designated as a QSB based on five parameters which are the total number of active clients, available total assets of clients with the stock broker, trading volumes of the stock broker (excluding the proprietary trading volume of the stockbroker), and the end of day margin obligations of all clients of a stockbroker (excluding the proprietary margin obligation of the stockbroker in all segments). The values shall be calculated on an annual basis and the revised list of QSBs shall be released jointly by stock exchanges, in consultation with SEBI. Now, Grievance redressal the compliance scores and the proprietary trading volumes of a broker will also be taken into account to be designated as QSBs. Existing QSBs will be evaluated on these parameters and once the revised list of QSBs is released, those QSBs which no longer belong to the list can apply again for an additional period of 3 financial years.

To strengthen the compliance culture among stock brokers and thereby, encourage stock brokers to follow the enhanced obligations and responsibilities, it has been decided to facilitate stockbrokers to voluntarily get designated as QSBs, who otherwise would not have qualified to become QSBs.