SEBI’s Move Towards Transparency Wins Hearts: Brokers and Depositories are Required to have Dedicated Websites for Investors in 2023.

India’s Securities and Exchange Board (SEBI) announced a new framework that is set to take effect on August 16. The new framework requires the reporting of the website URL of a Stock Broker (SB) or Depository Participant (DP) to the stock exchanges or depositories within one week of the announcement. Any changes made to the URL must be reported within three days of transformation. The move is aimed at enhancing transparency in the Indian securities market and will help ensure that all market participants comply with the rules and regulations set forth by SEBI.

The recent circular addressed to all recognized stock exchanges, recognized depositories, stock brokers, and depository participants, the Securities and Exchange Board of India (SEBI) mandated the maintenance of designated websites by stock brokers and depository participants. The circular highlighted that the designated website brings in transparency and helps investors keep themselves informed about the various activities of the stock brokers and depository participants.

The SEBI has mandated that all stock brokers and depository participants maintain a designated website, considering the advancements in technology and the need to provide better services to investors. The nominated website must display basic details of the stock broker/depository participant, such as registration number, registered address of head office, and branches if any. Additionally, the names and contact details of all critical managerial personnel, including the compliance officer, should also be displayed on the website.

The website must also provide step-by-step procedures for opening an account, filing a complaint on a designated email ID, and finding out the status of the complaint. Details of authorized persons must also be displayed. The SEBI has directed that the URL of the website of a stock broker or depository participant must be reported to the stock exchanges/depositories within a week of the circular coming into effect. Any modification to the URL must be reported within three days of such changes.

The provisions of this circular will come into effect from August 16, 2023. The stock exchanges and depositories have been directed to bring the provisions of this circular to the notice of stock brokers and depository participants and disseminate the same on their websites. Relevant bye-laws, rules, and regulations must be amended for the implementation of the above provisions. The SEBI has further directed that compliance reports must be submitted by August 31, 2023.

This circular has been issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities and to promote the development of, and regulate the securities markets.

The Indian financial market has been described as steady and operating transparently, fairly, and efficiently, according to recent reports on Sensex and Nifty. Long-term investors have been positive about the Indian markets, which have been shown to outperform peer and developed countries on a dollar-adjusted basis during the past three years.

However, in the past week, there have been unusual price movements in the stocks of a business conglomerate. As part of its mandate to maintain the orderly and efficient functioning of the market, the Securities and Exchange Board of India (SEBI) has implemented a set of publicly available surveillance measures, including the ASM system, to address excessive volatility in specific stocks.

This process is automatically activated under certain conditions of price volatility whatever the stock. In cases where SEBI becomes aware of entity-related matters, the proper course of action is taken after careful analysis. SEBI continues to be dedicated to ensuring the market’s integrity and that the appropriate structural strength is in place to allow for uninterrupted, transparent, and efficient operations.

edited and proofread by nikita sharma