SEBI Eases Trading Rules, But Smaller Brokers Face Consolidation Storm
Overview
India's securities regulator, SEBI, has proposed sweeping changes to simplify daily compliance for stock and commodity brokers, while granting exchanges greater operational autonomy. A significant shift to PAN-level disclosures for bulk and block deals will automate reporting. However, a hike in minimum net-worth for margin trading facilities could accelerate consolidation, forcing smaller intermediaries to adapt or exit.
SEBI Proposes Sweeping Changes to Ease Broker Compliance
New Delhi – January 11, 2026 – The Securities and Exchange Board of India (SEBI) has unveiled a raft of proposed ease-of-doing-business measures poised to dramatically simplify daily operations for stock and commodity brokers across the nation. These initiatives aim to grant exchanges greater autonomy while simultaneously increasing market competition.
Streamlined Deal Disclosures
Market participants anticipate the most immediate impact from SEBI's proposal to shift bulk and block deal disclosures from the Unique Client Code (UCC) level to the PAN level. Exchanges will now directly disseminate this information, eliminating the need for manual aggregation and reporting by brokers. This automation is expected to significantly cut down on a substantial daily compliance task.
Reduced Regulatory Friction for Exchanges
Exchanges themselves will benefit from reduced regulatory oversight. SEBI's proposal to remove the requirement for submitting end-of-day surveillance reports on pre-open call auction alerts will allow exchanges to take direct action, diminishing daily regulatory filing friction. The broader consolidation of trading rules across equities, derivatives, and commodities is also slated to materially reduce overall compliance effort by cutting down repetitive procedural reporting.
Consolidation Looms for Smaller Brokers
However, the proposed measures are not without challenges, particularly for smaller intermediaries. A significant alteration involves raising the minimum net-worth requirement for brokers offering margin trading facilities (MTF) from ₹3 crore to ₹5 crore. Margin funding is often a core competitive offering for mid-sized brokers.
This increased net-worth bar could force such brokers to either infuse substantial capital, exit the MTF business, or seek arrangements with larger intermediaries, potentially accelerating industry consolidation. Experts note that allowing exchanges to prescribe even higher thresholds could create uneven competitive outcomes across different markets.
Exchanges Gain Discretion in Market Making
Another substantial shift involves SEBI's proposal to integrate market making into a principle-based Liquidity Enhancement Scheme (LES). This grants exchanges considerable discretion to design incentives and compete for liquidity, particularly in new or emerging market segments. By moving away from rigid, prescriptive rules, SEBI is empowering exchanges to innovate and foster deeper market participation.
Differing regulations, encouraging new exchanges to invest up to 10 percent of their audited net worth while established markets can invest up to 25 percent of their net profits or free reserves into LES, aim to ensure a more level playing field. Higher incentive caps for newer exchanges serve as a direct tool for them to aggressively compete for volume in emerging products, potentially sparking a new war for liquidity.
