Zerodha CEO Nithin Kamath is all praise for India’s stock market regulator Stock Exchange Board of India, SEBI. In a lost post on social media platform X, formerly Twitter, Kamath thanked SEBI for the changes that the regulator has made since the year 2019.
He said that these changes have made the Indian stock market “more investor-friendly”. He also wrote about some changes that SEBI may introduce in the coming months and how these make help improve the working of the stock market
What Nithin Kamath wrote
Since 2019, SEBI has brought in several changes that have made our markets safer and more investor-friendly.It started with segregation of client funds, compulsory quarterly bank runs on brokers (quarterly settlement), removing pooling of funds for MF transactions, and more.
The latest regulation is around the direct payout of securities to investor demat accounts upon purchase. Today, when investors buy securities, they’re credited by the clearing corporation to the stock broker’s pool account, who in turn transfers them to the clients. With the introduction of new regulation, CCs will directly transfer securities to the client’s account, bypassing the broker’s pool. This also eases operations at a broker’s end.
Another move which will most likely be introduced is around increasing the limit for a Basic Services Demat account (BSDA) from the current ₹ 4 lakh to ₹ 10 lakh. So, investors will pay 0 or reduced AMC on their demat accounts with holdings up to Rs 10 lakh.
The reduction in the AMC is, in a way, a result of the gradual reduction in a broker’s role. In the not-so-distant future, I wouldn’t be surprised if all that the brokers will be doing is just processing orders.
He said that these changes have made the Indian stock market “more investor-friendly”. He also wrote about some changes that SEBI may introduce in the coming months and how these make help improve the working of the stock market
What Nithin Kamath wrote
Since 2019, SEBI has brought in several changes that have made our markets safer and more investor-friendly.It started with segregation of client funds, compulsory quarterly bank runs on brokers (quarterly settlement), removing pooling of funds for MF transactions, and more.
The latest regulation is around the direct payout of securities to investor demat accounts upon purchase. Today, when investors buy securities, they’re credited by the clearing corporation to the stock broker’s pool account, who in turn transfers them to the clients. With the introduction of new regulation, CCs will directly transfer securities to the client’s account, bypassing the broker’s pool. This also eases operations at a broker’s end.
Another move which will most likely be introduced is around increasing the limit for a Basic Services Demat account (BSDA) from the current ₹ 4 lakh to ₹ 10 lakh. So, investors will pay 0 or reduced AMC on their demat accounts with holdings up to Rs 10 lakh.
The reduction in the AMC is, in a way, a result of the gradual reduction in a broker’s role. In the not-so-distant future, I wouldn’t be surprised if all that the brokers will be doing is just processing orders.
