SCRA rule clarification for Xerod’s Nithin Kamath stock brokers, “huge” for the rhinemator. Here is why

The founder and CEO of Xerodha Nithin Kamath on Tuesday advised the Indian Finance Ministry and the NSE that the SCRA enabled stock brokers to invest their own funds without exchange approval or sanctions. Calling it a huge for the renemator, the initiative of Jerodh, which supports and invest in Indian startups, Kamath said that Zerodh will now be able to allocate more capital to support domestic startups from brokerage entity.

“Finally, after the SCRA rules clarified by @Finminindia and NSE, brokers can now invest their own funds without exchange approvals or restrictions. This is huge for @Renematurine. Now we can support Indian startups directly from the brokerage entity,” Kamat.

In May, the government amended the rules of securities contract to provide regulatory clarification and to ease the business for stock brokers. The finance ministry said, “The amendment gives regulatory clarification to increase the ease of doing business for brokers.

Through a circular issued on May 16, some rules of how the finance ministry can invest in the stockbrokers recently invested their own money. The main point of change is that when a stockbroker invests his or her money, it will usually not be considered as part of their “broking business”.

The clarity states that “investments made by the member cannot be regarded as a business unless when such investments include client funds or client securities or the system of making financial responsibility on the broker.” The government amended the rules by filing this provision in Rule 8 of Securities Contracts (Regulation) Rules, 1957.

This means that they do not have to follow the same strict rules that apply to client-related transactions.

However, there are exceptions to this rule. If investments made by stock brokers include client money or client securities, or if these investments make an economic risk for their brokerage pay FIRM, these investments will still be considered as part of their business and be subjected to general rules.

The clarity states that “investments made by the member cannot be regarded as a business unless when such investments include client funds or client securities or the system of making financial responsibility on the broker.”

Also Read: Xerod’s MTF pays BET, touches Rs 3,000 crore in 6 months despite bear market: Nithin Kamath

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