On 7-1-2026, the Securities and Exchange Board of India (‘SEBI’) issued a notification implementing the SEBI (Stock Brokers) Regulations, 2026, a framework to govern the registration, obligations, and responsibilities of stock brokers and clearing members in India’s securities market.
These Regulations came into effect on 7-1-2026.
Key Points:
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This Regulation is framed under the provisions of SEBI Act, 1992, aiming to establish framework for:
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Registration of stock brokers and clearing members.
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Their operational obligations and general responsibilities.
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Matters connected or incidental to these activities
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With the commencement of the SEBI Stock Broker Regulations, the SEBI (Stock Brokers) Regulations, 1992 is repealed.
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A SEBI-registered stock broker can act as a clearing member, and a SEBI-registered clearing member can act as a stock broker, in any segment with the respective corporation or exchange’s approval, without separate registration.
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Chapter II lays down the detailed procedure for registration of stock brokers, specifying the application process, eligibility criteria, and conditions under which SEBI may grant or refuse a certificate of registration.
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A person can act as a Stock Broker unless registered and registration is applicable to:
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Any person intending to act as a stock broker will have to apply to SEBI through a recognised stock exchange, either electronically or otherwise.
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Applications will be accompanied by the prescribed fees (Chapter IX).
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The recognised stock exchange examines the applicant’s eligibility under relevant Acts, regulations, and its own bye-laws.
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Within 30 days, the exchange forwards the application with its recommendation to SEBI.
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Once registered, a broker may operate in any recognised stock exchange or segment, subject to exchange approval.
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Under Regulation 7-10, the Board will grant certificate to a stock broker.
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The conditions for granting or refusing a certificate require that a registered stock broker must:
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Hold membership of a recognised stock exchange.
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Abide by exchange rules, regulations, and bye laws.
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Obtain SEBI’s prior approval for change in control.
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Pay fees as prescribed.
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Address investor grievances within 21 calendar days.
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Follow the Code of Conduct (Chapter VIII).
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Maintain minimum net worth (Chapter X).
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Inform SEBI of any material change (e.g., control, directors, compliance officer, name, office, constitution, net worth, fit & proper status).
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Every stock broker under Regulation 15 will have to maintain, physically or electronically, detailed records including:
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Register of transactions (Sauda Book).
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Client ledgers and general ledger.
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Journals, cash book, and bank statements.
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Register of securities and depository records.
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Copies of contract notes issued to clients.
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Written client consents for principal contracts.
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Margin deposit/collateral ledgers.
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Client account opening forms.
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Special provisions apply to brokers in the Execution Only Platform segment, with specified record keeping requirements.
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Every broker will be required to appoint a compliance officer responsible for:
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Monitoring compliance with SEBI Acts, rules, regulations, and exchange bye laws.
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Handling investor grievance redressal.
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The compliance officer will have to report non-compliance to the recognised stock exchange immediately.
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The responsibilities and obligations of a Stock Broker include:
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Segregating client money and securities from their own accounts.
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Ensuring client funds are always available and not misused.
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Following SEBI’s framework for collateral allocation and upstreaming of client funds.
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Maintaining sound risk management systems to safeguard client assets.
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Establishing adequate internal procedures and controls to manage risks effectively.
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Complying with audit requirements.
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Adhering to SEBI’s KYC Registration Agency Regulations, 2011.
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Ensuring confidentiality of client details, except when disclosure is legally required or with client consent.
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Brokers will establish surveillance and internal controls to detect, prevent, and report fraud or market abuse, with documented policies, defined responsibilities, and regular compliance reviews.
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Any suspicious activity will be promptly reported to exchanges, supported by whistleblower protections, while the Audit Committee or Board remains accountable for enforcement.
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Chapter VIII deals with Code of Conduct, as follows:
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Stock brokers will uphold integrity, fairness, and promptitude in all business dealings.
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They will have to act honestly, diligently, and avoid manipulative or deceptive practices that distort markets.
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Brokers should maintain competence, provide fair and prompt services, and ensure employees are professionally trained.
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Duties to investors include timely execution of orders, prompt communication, confidentiality, and avoidance of misleading advice.
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Brokers should prevent conflicts of interest, disclose them when unavoidable, and prioritize client interests.
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As underwriters, brokers will act ethically, protect client interests, avoid misrepresentation, and disclose conflicts transparently.
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They cannot engage in unfair competition, false markets, price manipulation, or misuse of unpublished price sensitive information.
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⮚ Protection of Client Funds and Securities
⮚ Risk Management & Internal Controls
⮚ Implementing a robust cyber security framework to protect trading systems and client data.
⮚ Maintaining continuous enrolment on SEBI’s SCORES platform.
⮚ Registering on the Online Dispute Resolution (ODR) portal as mandated.
⮚ Following SEBI’s advertising code to ensure fair, transparent, and non-misleading communication.
⮚ Ensuring outsourced activities comply with SEBI’s guidelines to mitigate risks from third party service providers.
⮚ Abiding by all SEBI and exchange rules, circulars, and notifications.
⮚ Complying with the Investor Charter to uphold transparency and investor rights.
⮚ Faithfully executing client orders at the best available market price.