SEBI has extended the deadline for stock brokers to submit their net worth certificates for margin trading. The auditor's certificate for the half-year ending September 30 must now be submitted within 45 days, and the certificate for the half-year ending March 31 must be submitted within 60 days. Additionally, there is a proposal to increase the minimum order size for block deals from ₹10 crore to ₹25 crore.
SEBI News: In a significant relief to stock brokers, the Securities and Exchange Board of India (SEBI), the Indian market regulator, has relaxed the deadline for net worth certificates related to margin trading facilities. Brokers will now have 45 days to submit the certificate for the half-year ending September 30 and 60 days for the half-year ending March 31. Previously, these deadlines were October 31 and April 30, respectively. SEBI states that this change will simplify compliance and enhance ease of doing business. The possibility of increasing the minimum order size for block deals to ₹25 crore is also being considered.
Previous Rule
Under the existing regulations, brokers were required to submit an auditor's certificate confirming their net worth as of March 31 and September 30 each year. This certificate had to be submitted to the stock exchange by April 30 and October 31, respectively. This meant brokers had to submit this document twice every six months.
What Has Changed Now
Considering the suggestions from market participants and requests for extending the deadline, SEBI has now made changes. Under the new arrangement, brokers will have 45 days to submit the auditor's certificate for the half-year ending September 30 and 60 days for the half-year ending March 31.
This means the new deadlines will be November 15 and May 31. Previously, these dates were October 31 and April 30. This change is effective immediately.
Why This Decision Was Made
SEBI has clarified that this step has been taken to facilitate brokers and align the submission of the net worth certificate with the announcement of financial results. The process of submitting the net worth certificate will now be linked to the deadline for declaring financial results as stipulated under the Listing Obligations and Disclosure Requirements (LODR) regulations.
Instructions to Stock Exchanges
SEBI has issued instructions to all stock exchanges to make the necessary amendments to their bye-laws, rules, and regulations. Additionally, they have been directed to immediately inform all their members about this change to avoid any inconvenience.
Consideration of Changes to Block Deal Rules
SEBI has also recently proposed amendments to the rules related to block deals. Currently, the minimum order size for a block deal is ₹10 crore. It is now suggested to increase this to ₹25 crore.
Block deals are considered an important part of the total turnover of the stock market. In these deals, a large transaction takes place between a buyer and a seller in a single trade. This transaction is conducted in a special window of the stock market, which is open only twice a day for 15 minutes each time.
The current limit for block deals has been in effect since 2017. The market regulator believes that it is now necessary to increase the minimum order size, considering the changing times and the increasing maturity of the market. For this, SEBI has issued a consultation paper and has also sought suggestions from market participants.
Convenience for Brokers and Investors
With the implementation of the new deadlines, brokers will get additional time to submit the auditor's certificate. This will make compliance easier for them. Furthermore, changes in the rules for block deals are expected to increase the participation of large institutional investors.
