On 19-5-2025, the Ministry of Finance notified the Securities Contracts (Regulation) Amendment Rules, 2025 to amend the Securities Contracts (Regulation) Rules, 1957 making a regulatory clarity on ease of doing business for broker’s and their investment schemes. These provisions came into force on 19-5-2025.
Key Provisions:
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Brokers will be allowed to invest their own or borrowed funds in group companies while remaining compliant with regulations, provided they keep financial liabilities within permissible limits.
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The term, ‘any business’ in Rule 8, has been clarified as to what are included as usual business activities which was earlier open to interpretation leading to uncertainty for brokers regarding investments.
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All the investments that involve client funds or client securities, or which relate to arrangements in creating a financial liability on the broker, will be considered ‘business activities’.
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This encourages brokers to boost capital and expand businesses while eliminating the limitations imposed on their investment activities.
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Investments made by broker’s own or borrowed money won’t be categorised under ‘business operations’ preventing unnecessary compliance hurdles, ensuring clients’ money and securities are not utilized by brokers for investments.
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Making a clear distinction between owned funds/personal investments with business activities, responsibly engages clients’ money into capital market.
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An overall diversification into investment opportunities can now be explored by brokers giving higher liquidity and stronger financial stability in India’s securities markets.