SEBI eases compliance for brokers with centralised inspection regime; focus on high-risk firms

Capital markets regulator SEBI has overhauled its inspection framework for market intermediaries, mandating joint annual inspections by Market Infrastructure Institutions (MIIs) to reduce compliance burdens and enhance regulatory efficiency.

In a circular issued on Thursday, the Securities and Exchange Board of India directed stock exchanges, clearing corporations, and depositories to coordinate and conduct unified inspections of brokers, depository participants (DPs), and clearing members, instead of separate and overlapping reviews.

The move is aimed at ensuring ease of doing business and taking a comprehensive view of the entity’s operations across all MIIs, along with optimum utilisation of resources

Key changes introduced:

Entities not falling into these categories will now be inspected at least once every three years, a move expected to benefit smaller and lower-risk firms.

However, SEBI clarified that MIIs retain the authority to conduct special inspections in response to triggers such as investor complaints or suspected malpractices, regardless of the regular inspection schedule.

MIIs have been directed to jointly prepare a Standard Operating Procedure (SOP) by November 1, 2025, outlining detailed inspection parameters, the role of the Lead MII, and mechanisms for data sharing.

Implementation timeline & exceptions

• The new framework will take effect from December 1, 2025, and replaces the previous inspection policy laid out in a 2017 circular.

• MIIs retain the authority to conduct special or limited-purpose inspections in response to complaints, investor arbitration cases, or regulatory referrals.

• Qualified Stock Brokers (QSBs) will continue to be governed by SEBI’s enhanced obligations framework issued in 2023.