The Securities and Exchange Board of India (SEBI) is working on a \u2018one event, one penalty\u2019 mechanism, a move that aims to reduce the compliance burden on broking firms. Currently, brokers face multiple penalties for a single violation as they operate across multiple exchanges.<\/p>\n
Sources familiar with the matter revealed that SEBI is in talks with exchanges to develop a standardized penalty framework. This would ensure that different bourses do not levy separate penalties for the same non-compliance event. SEBI has officially confirmed the ongoing discussions.<\/p>\n
Presently, when a broking firm fails to comply with a regulatory or statutory requirement, each exchange it is a member of imposes separate penalties. This results in a significantly higher cumulative penalty amount for brokers.<\/p>\n
For instance, if a brokerage firm fails to file an annual report on time, multiple exchanges can each impose a penalty, drastically increasing the total financial burden.<\/p>\n
To simplify compliance and reduce unnecessary financial strain, SEBI plans to implement a single-penalty system, wherein only one exchange will have the authority to penalize a firm for a particular violation.<\/p>\n
\n\u201cSEBI is considering the concept of \u2018one event, one penalty\u2019 as part of its effort to enhance the ease of doing business for brokers,\u201d said a source close to the discussions.<\/p>\n<\/blockquote>\n
Designated Exchange to Handle Penalty Imposition<\/h2>\n
New Mechanism Under Consideration<\/h3>\n
SEBI is deliberating the introduction of a \u2018designated exchange\u2019 model to assign penalty responsibility to a single exchange. Under this framework, broking firms could be allocated to a specific Exchange A or Exchange B, which alone will have the authority to impose a fine.<\/p>\n
At present, the designated exchange model exists for administrative and supervision purposes, but SEBI may modify the framework to allow the designated exchange to handle penalties as well.<\/p>\n
Dual SEBI Departments Collaborating on the Plan<\/h3>\n
Two SEBI departments are actively working on this initiative:<\/p>\n
\n
- \n
The department regulating exchanges, clearing corporations, and depositories.<\/p>\n<\/li>\n
- \n
The department overseeing brokerage firms.<\/p>\n<\/li>\n<\/ol>\n
According to sources, the plan is expected to be finalized by June 2025.<\/p>\n
\n“The regulator\u2019s intent is not to impose penalties for revenue but to encourage better compliance behavior among brokers,” a SEBI official stated.<\/p>\n<\/blockquote>\n
Brokers and SEBI Working to Reduce Compliance Violations<\/h2>\n
Over 300 Violations Under Review<\/h3>\n
Currently, brokers, exchanges, and SEBI have identified nearly 300 different types of regulatory violations, each subject to separate penalties. The ongoing discussions aim to reduce the number of violations and standardize penalty amounts.<\/p>\n
Industry players argue that many penalties arise due to technical issues beyond their control.<\/p>\n
\n\u201cFor example, if a client provides margin and we attempt to upload it but fail due to a system lag, clearing corporations still impose penalties on brokers,\u201d said a market participant.<\/p>\n<\/blockquote>\n
Another industry source highlighted that some penalties are imposed due to differences in regulatory interpretation.<\/p>\n
\n“A broker may not classify an event as a technical glitch, but during an inspection six months later, the exchange may decide it was. In such cases, penalties could reach \u20b940 lakh,” he explained.<\/p>\n<\/blockquote>\n
Proposal for a Point-Based Compliance System<\/h2>\n
Alternative to Monetary Fines<\/h3>\n
To make penalties more fair and predictable, market participants have suggested replacing the current monetary fine system with a point-based compliance system.<\/p>\n
\n\u201cIf violations were tracked using a point system, brokers could be given warnings first, and penalties could be imposed only after reaching a threshold,\u201d suggested an industry expert.<\/p>\n<\/blockquote>\n
SEBI and Exchanges Developing a Common Compliance Portal<\/h2>\n
Single Filing Platform for Brokers<\/h3>\n
In addition to the \u2018one event, one penalty\u2019 mechanism, SEBI and stock exchanges are working on a centralized compliance filing portal. This would allow brokers to submit filings in one place instead of separately reporting to multiple exchanges.<\/p>\n
Currently, a dozen compliance reports are being tested on the platform, and further developments are underway.<\/p>\n
\n“The development of a common portal is in progress to enable brokers to file reports just once across all exchanges. SEBI is also taking steps to encourage voluntary compliance,\u201d SEBI stated.<\/p>\n<\/blockquote>\n
Despite these developments, SEBI has not provided a specific timeline for launching the platform.<\/p>\n","protected":false},"excerpt":{"rendered":"
Regulator Aims to Standardize Penalties and Reduce Compliance Burden The Securities and Exchange Board of India (SEBI) is working on a \u2018one event, one penalty\u2019 mechanism, a move that aims to reduce the compliance burden on broking firms. Currently, brokers face multiple penalties for a single violation as they operate across multiple exchanges. Sources familiar […]<\/p>\n","protected":false},"author":4,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[615,1362],"tags":[],"ppma_author":[1331],"class_list":{"0":"post-5906","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-stock-market-news","8":"category-finance-and-economy-news"}," _eael_post_view_count":0,"authors":[{"term_id":1331,"user_id":4,"is_guest":0,"slug":"sourabh","display_name":"Sourabh Sharma","avatar_url":{"url":"https:\/\/trending.niftytrader.in\/wp-content\/uploads\/2025\/11\/Sourabh-Sharma.png","url2x":"https:\/\/trending.niftytrader.in\/wp-content\/uploads\/2025\/11\/Sourabh-Sharma.png"},"0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":""}],"_links":{"self":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/5906","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/comments?post=5906"}],"version-history":[{"count":1,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/5906\/revisions"}],"predecessor-version":[{"id":5908,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/5906\/revisions\/5908"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/media\/5907"}],"wp:attachment":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/media?parent=5906"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/categories?post=5906"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/tags?post=5906"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/ppma_author?post=5906"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}