Sebi Streamlines Penalty Framework to Boost Broker Efficiency
Sebi has rationalized the penalty framework for stock brokers, reducing penalties from 235 to 90. The revised system aims to standardize penalties, minimize reputational risks, and enhance compliance. A technology-based reporting mechanism has also been implemented to lower compliance costs for brokers.
- Country:
- India
In a strategic move to bolster business compliance, Sebi has slashed the number of penalties for stock brokers from 235 to 90. This reform is designed to streamline the penalty framework, ultimately aiding stock brokers by standardizing penalties and lessening reputational risks.
The overhaul removed 40 pre-existing penalties and reclassified 105 minor lapses under 'financial disincentives' instead of penalties to mitigate stigmatization. The changes are crafted to prevent brokers from being penalized by multiple exchanges for the same issue.
Implemented in two phases, the framework introduces a technology-based common reporting mechanism, 'Samuhik Prativedan Manch', allowing consolidated report submissions, which took effect on August 1. This initiative is set to reduce compliance costs significantly.
(With inputs from agencies.)
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