SEBI New Rules : The Securities and Exchange Board of India (SEBI) has made a major change for the stock market. SEBI has taken a step forward to ease compliance and as a major reform towards the market. SEBI has finalized several major reforms for stock brokers and stock exchanges.

SEBI has decided to rationalize and standardize the penalty framework applicable to stock brokers. Under the new rules, both the number and severity of penalties imposed on brokers will be reduced. SEBI has made this announcement to take a step forward towards Ease of Doing Business.

According to a report in Business Line, SEBI Chairman Tuhin Kant Pandey said that before formulating the new rules, the regulator held extensive discussions with stockbrokers and consulted them, following which the new rules were formulated. SEBI has decided that minor and minor mistakes by brokers will no longer be considered a penalty. Instead, they will be called “Financial Discrepancy.” This means that minor mistakes will no longer attract heavy penalties.

Penalties will be imposed in only 90 cases instead of 235.
According to media reports, a total of 235 existing penalty items were reviewed under SEBI’s new system. Of these, 40 penalties were completely eliminated, while 105 minor procedural lapses and technical errors have been classified as “Financial Disincentives.” After this, penalties will now apply only to 90 violations. SEBI has amended 36 penalties. In 7 cases, only a warning or advice will be issued for the first offense. In 6 cases, the maximum penalty limit has been set. No changes have been made in 29 cases. 12 new penalty provisions have been added.

Relief for Technical Glitches
Technical glitches in the market, such as order processing or system errors, often resulted in penalties for brokers. Under the new rules, penalties for such technical issues will be significantly reduced, thus reducing unnecessary pressure on brokers.

The term “penalty” will not be used everywhere.

SEBI states that the term “penalty” is often associated with “stigma” or “punishment,” which can impact a broker’s reputation. Therefore, in cases of technical or procedural errors, the term “financial disincentive” will now be used instead of “penalty.” SEBI has also clarified that penalties imposed by different exchanges for the same error will be avoided. According to SEBI’s system, only the lead exchange will take action in such cases, so that brokers do not face multiple penalties for the same mistake.

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Many people cheat investors in the stock market. But now the Security Exchange Board of India has come up with a new rule for the investors. After the implementation of which money will be deducted from investors’ accounts only when investors buy shares. Broker’s commission will also not be charged before the share transaction is done. For example, the service of ASBA is taken advantage of in IPOs. Similarly, now ASBA will be implemented in the stock markets as well. After which the fraud in the stock market will be curbed.

What is ASBA?

Application Supported by Blocked Amount (ASBA) is used in India for initial public offering or follow-on public offering. In which the amount is deducted from the bank account of the investor only when the shares are allotted to him. In this rule, the amount of the first investor is blocked. Which is deducted after every transaction. Now the same rule is going to be implemented in Savvy stock market as well. SEBI will implement this rule from 1 January 2024.

Security Exchange Board of India i.e. SEBI said that through ASBA i.e. Application

Supported by Blocked Amount, people investing in the stock market can be protected from fraud. After the implementation of ASBA, the money is deducted only until the process of buying and selling of shares is completed. It remains in the hands of the investors that the amount they want to block outright, they will get the facility to deduct from the account several times. The amount of share investors is first sent to the clearing corporation. Where the amount can be withdrawn only on the purchase and sale of shares. This facility can be availed on the basis of UPI.

Investors will have options

Your money is blocked under ASBA. Which is deducted from your account only when the share transaction is done. But it completely depends on the investors and brokers whether they want to avail this facility or not. But investors who have multiple broking accounts can use non-UPI facility for some accounts and UPI facility for other accounts if they so desire. After implementing this new rule of SEBI, the fraud in the stock market can be reduced to a great extent.

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