Sebi to review rule barring mkt players

The Securities and Exchange Board of India (Sebi) has informed the Bombay High Court that it will soon review a controversial provision in its ‘fit and proper person’ criteria that disqualifies key personnel at market intermediary firms merely for having a chargesheet filed against them.

- Neha Joshi

This follows a challenge from major brokerage firms that said the rule was unconstitutional and amounted to treating a person as "guilty until proven innocent’.

The markets regulator made the statement before a division bench of the court comprising Justice R.L. Chagla and Justice Farhan Dubash that was hearing a clutch of petitions filed in 2023 by a group of brokerages including Motilal Oswal Financial Services and Anand Rathi Shares and Stock Brokers.

Sebi said it has scheduled internal discussions to review the contentious provisions by the end of the year.

The regulator had already assured the court back in 2023 that it would not insist on compliance with show-cause notices issued under the rule, given the pending case, so no individual or company has thus far been disqualified because of a charge sheet.

The matter has been adjourned to 6 January 2026, by when Sebi is expected to formally respond following its internal review.