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 SEBI has taken the step.
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.
Big Brokers have a huge client base, and 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 percent.
The corporate governance system will have all the required committees like audit and nomination. These committees will ensure proper risk management, and security and will also ensure that compliance is done properly. Bringing the Systemically Important Broker status will help in ensuring cyber security and will deploy a formalized system for all brokers.
Link: After the Karvy Stock Broking failure, SEBI is taking new steps to shield the pursuits of brokers and investors, and the idea of Systemically Important Brokers (SIB) is in keeping with the same.
If this idea advances into further stages, then strict norms referring to the capital shape and risk management can be added in for brokers. Also, extra measures on technical elements and their capability to take in shocks can be suggested.