SEBI Launches Execution Only Platforms: Key Changes Effective September 2023

Introduction

The Securities and Exchange Board of India (SEBI) has officially announced the commencement of Execution Only Platforms under the Securities and Exchange Board of India (Stock Brokers) Regulations, 1992.

Execution Only Platforms Notification

On June 19, 2023, SEBI released Notification No. SEBI/LAD-NRO/GN/2023/133, which underscores the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992). The notification specifies the following provisions that will come into force on September 1, 2023:

Sub-regulation (1A) of Regulation 17: This sub-regulation outlines specific operational guidelines which will now be effective.
Execution Only Platforms Inclusion: The relevant row for 'Execution Only Platforms' has been included in the Table of sub-clause (1) of clause 3 under Part B of Schedule V.
Exemption from Net Worth Requirements: The remark stating, “However, the requirement of Variable Networth shall not be applicable for Execution Only Platforms segment,” has been incorporated in Table 1 of Schedule VI.
Execution Only Platforms in Schedule VI: An additional row for 'Execution Only Platforms' has been added to Table 2 of Schedule VI.

These changes signify an important regulatory shift in SEBI’s approach to enabling a more flexible trading environment for clients utilizing Execution Only Platforms.

Conclusion

The implementation of these provisions marks a critical development in the framework governing stock brokers in India. Stakeholders are encouraged to familiarize themselves with these amendments to ensure compliance and to leverage the opportunities presented by Execution Only Platforms starting from September 1, 2023.