SEBI to give Systemically Important Broker status for big brokers soon
Big Brokers have a huge client base, large amounts of assets and thus according to the government they need corporate governance so that all tasks are done smoothly and efficiently. It should be noted that the top 5 discount brokers have a market share of 59 per cent.
Zee Business in an exclusive report said that Markets regulator Securities Exchange Board of India (SEBI) is likely to give big brokers Systemically Important Broker status from the new financial year.
According to the report, brokers handle a significantly large amount of investor money and to secure this the SEBI has taken the step.
Big Brokers have a huge client base, large amounts of assets and thus according to the government they need corporate governance so that all tasks are done smoothly and efficiently. It should be noted that the top 5 discount brokers have a market share of 59 per cent.
Watch: SEBI: Systemically Important Broker Status For Big Brokers Soon
The corporate governance system will have all the required committees like audit and nomination. These committees will ensure proper risk management, security and will also ensure that compliance is done properly.
The talks to bring Systemically Important Broker status have been going on since June and in a recent meeting held last month in November, SEBI asked for suggestions and comments on the proposal.
Bringing the Systemically Important Broker status will help in ensuring cyber security and will deploy a formalised system for all brokers.
In June, Zee Business had reported that SEBI is contemplating a new concept to additionally safeguard big brokers and investors connected to them.
This concept of Systemically Important Brokers - might be like the Systemically Important Status concept as implemented by RBI for big banks and non-banking finance companies.
After the Karvy Stock Broking failure, SEBI is taking new steps to safeguard the interests of brokers and investors, and the concept of Systemically Important Brokers (SIB) is in line with the same.
If this concept advances into further stages, then strict norms pertaining to capital structure and risk management may be brought in for brokers. Also, additional measures on technical aspects and their capacity to absorb shocks may be suggested.
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