The Securities and Exchange Board of India (SEBI) has a draft circular on retail participation in the trading of government securities (G-Secs) to improve the ease of doing business and maximising existing infrastructure. The SEBI is inviting public comments until 25 October 2024. The proposal aims to allow stock brokers to offer these services as a separate business unit on an arms-length basis.
The draft states that SEBI-registered stock brokers will be able to access the negotiated dealing system-order matching (NDS-OM) to trade G-Secs. Finer details such as policy, eligibility criteria, risk management, investor grievances, inspection, enforcement, claims etc., will be decided by the applicable regulatory authorities.
However, the following key safeguards have been outlined:
- Activities under the proposed circular will be segregated from other securities market related actions of the stock broker;
- The separate business unit established under the proposed circular will be exclusive to transactions on the NDS-OM only;
- A unique account is to be maintained for the separate business unit;
- The separate business unit’s net worth must be segregated; and
- The stock broker’s net worth criteria must be satisfied, excluding the separate business unit account.
Investors will be unable to use the stock exchange’s grievance redressal mechanism and investor protection fund as well as the SEBI complaints redressal system because the proposed activities will be governed under other regulatory bodies.
Comments can be submitted and, in case of technical issues, can be sent via email at consultationMIRSD@sebi.gov.in.
