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SEBI Updates Rules for Market Intermediaries
The Securities and Exchange Board of India (SEBI) board has approved major changes to the “fit and proper person” framework for market intermediaries.
These changes aim to make the rules clearer and fairer, balancing the need for integrity in the market with the ease of doing business.
One of the key changes is that filing of an FIR, complaint, or chargesheet in economic offence cases will no longer automatically disqualify someone.
SEBI will now review such cases individually instead of applying automatic disqualification.
Who Can Be Disqualified Now
The updated rules expand disqualification to include any conviction for an economic offence or violation of securities law.
Previously, only breaches of ethical standards were considered.
SEBI says this ensures that only individuals with honesty, integrity, ethical conduct, and good character can participate in the securities market, while also supporting smoother business operations for participants.
SEBI has also clarified that initiation of liquidation proceedings alone will not lead to disqualification, though the existing rules for disqualification on actual liquidation will still apply.
Reporting Obligations for Intermediaries
Market intermediaries and applicants on recognized stock exchanges must inform SEBI within 15 working days about any significant events involving themselves, their key personnel, or controlling persons.
This ensures transparency and allows SEBI to monitor potential risks without unfairly penalizing participants.
These reforms aim to make the regulatory process fairer, clearer, and more principle-based, while still protecting the integrity of India’s securities market.
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