“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.”
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