Unified reporting system for brokers across exchanges soon

A CIRCULAR WILL be issued soon treating penalties for material violations such as fund diversion and wrong reporting differently from those that are unintentional and technical in nature, as the latter violations need not be penalised heavily and some can be waived by giving a warning.

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As part of the rationalisation, Sebi reviewed a total of 235 penalty items. “Of these, 40 redundant penalties were removed, and 105 were classified as financial disincentives. This left 90 penalties,” Pandey said.

These 90 penalties were further rationalised as follows: 36 penalties were streamlined, 7 types of cases will receive advisory warnings instead of penalties for the first instance, and in 6 cases penalty caps will be introduced. No changes were made to 29 penalties. Additionally, 12 penalties were introduced to address gaps, Pandey said.

Currently, all stock exchanges are empowered to charge a penalty at different rates for the same violation by a broker, increasing the cost of doing business. As per the revised norms, a broker will pay a uniform penalty only to the identified lead stock exchange for the same violation across exchanges instead of paying separately to each one of them.

Other measures such as a technology-based common reporting mechanism for onetime submission of documents for stock brokers are also being introduced, aiming to reduce compliance burdens across exchanges.