Govt amends SCRA Rules to give regulatory clarity to brokers

The government on Monday amended the Securities Contracts (Regulation) Rules (SCRR) to provide regulatory clarity and enhance ease of doing business for brokers.

“The amendment gives regulatory clarity to enhance ease of doing business for brokers,” the finance ministry said.

The decision to amend the rules followed extensive consultations initiated through a Consultation Paper released in September 2024, which invited feedback from stakeholders.

The finance ministry said the move was prompted by concerns raised over certain provisions in Rule 8 and the need to adapt regulatory frameworks in view of the evolving business models of brokers and the growing complexity of the financial sector.

"Given the growth in the scale and interconnectedness of the financial sector and the evolution of nature of business of brokers with time, the DEA felt it necessary to review the appropriateness of safeguards embedded in the Rules so that the intent of the Rules is served without constraining activities of the stakeholders," the ministry said.

The amended rule clarifies that investments made by a broker shall not be treated as part of their business activities, except when such investments involve client funds or securities, or result in a financial liability for the broker.

“The amendment… is part of the broader emphasis of the Government to provide regulatory clarity and enhance ease of doing business in the financial sector,” the DEA stated.

“It will ensure that market intermediaries continue to support the development of India's capital markets in a transparent and well-regulated manner.”