Regulations
IRDA sets up panel to examine issue of retail broking system

The 10-member committee will also consider the qualification, examination and syllabus for players in the retail broking system in insurance

New Delhi: The Insurance Regulatory and Development Authority (IRDA) have set up a committee to examine the issue of allowing retail broking system in the insurance space with an aim to increase penetration, reports PTI.

 

Besides, the 10-member committee will also consider the qualification, examination and syllabus for players in the retail broking system.

 

The panel will also consider manner in which the retail broking system could operate as sub-brokers and together with insurance brokers the manner in which these could be dovetailed with the Common Service Centres proposed to be set up by the Government of India, IRDA said.

 

Various stakeholders have been requesting the authority to consider sub-broking system as prevalent in other jurisdictions, it said.

 

It noted that in order to increase the penetration of insurance in semi urban and rural areas presence of intermediaries is vital.

 

At present the insurers and brokers are mainly operating mostly in big cities, it said.

 

The committee, headed by PC James chair professor of National Insurance Academy, will submit its report by 31 January 2013.

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Minimum capital deposit for stock brokers hiked to Rs50 lakh

SEBI has increased the minimum capital deposit required to be maintained by a stock broker to up to Rs50 lakh from a maximum of Rs10 lakh

Mumbai, Dec 19 (PTI) Market regulator Securities and Exchange Board of India (SEBI) has increased the minimum capital deposit required to be maintained by a stock broker to up to Rs50 lakh, from a maximum of Rs10 lakh earlier, to safeguard against any risks posed by them to the overall market, reports PTI.

 

The base minimum capital (BMC) is the deposit maintained by the member of a stock exchange against which no exposure for trades is allowed and these deposits were last hiked by SEBI nearly 16 years ago in 1996.

 

These are meant for meeting contingencies in any segment of the exchange and are commensurate with the risks that the broker may bring to the system.

 

Announcing the increase and other changes in the BMC requirements, which would be implemented by 31 March 2013, SEBI said the market structure has undergone significant structural changes over the years.

 

"The various technological changes and the increased speeds of trading have brought to fore the greater quantum of risks arising during the course of execution of transactions. Hence based on deliberations at various forums, it has been decided to review and enhance the BMC requirement," it said.

 

As per the revised BMC framework, it would be enhanced for members holding registration as 'stock-broker' in cash segment, while BMC would also be introduced for members holding registration as 'trading member' in any derivative segment.

 

SEBI has proposed a higher BMC requirement for those using high-frequency algorithmic trading facilities, while the deposits would be comparatively lower for the trading members indulging in only proprietary trading.

 

The new BMC deposit requirements, as per the profile of the members, range from Rs10 lakh to Rs50 lakh for members of stock exchanges having nation-wide trading terminals, while the same for members of other stock exchanges would be 40% of the same.

 

Way back in 1996, SEBI had asked the stock exchanges to double the base minimum capital requirement for their members from Rs5 lakh to Rs10 lakh in the case of BSE and Calcutta Stock Exchange, from Rs3.5 lakh to Rs7 lakh in the case of Delhi and Ahmedabad Stock Exchange and from Rs2 lakh to Rs4 lakh in the case of other stock exchanges.

 

Later in 2005, SEBI had made certain changes in the BMC framework, but the deposit amounts remained same at that time.

 

The regulator said stock brokers or trading members should maintain a minimum capital of Rs10 lakh in case of trading of securities are done through their own money rather than customer's without using Algo trade.

 

Algo refers to orders on bourses that are generated using high-frequency and automated execution logic.

 

SEBI said BMC limit should be Rs15 lakh in case of a stock broker trades on behalf of client (without proprietary trading and without Algo) and it should be Rs25 lakh in case of proprietary trading as well as trading on behalf of client without Algo.

 

Besides, SEBI has fixed the BMC limit to Rs50 lakh for all trading members and brokers who participates in the trades through Algo.

 

The regulator said a minimum 50% of the deposit should be in the form of cash and cash equivalents.

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RBI to speed up process for issuance of banking licences

Referring to issuing of licences to corporates, the RBI deputy governor said first the guidelines on banking licences should be in place

Mumbai: Days after Lok Sabha passed the Banking Laws (Amendment) Bill, Reserve Bank of India (RBI) Deputy Governor KC Chakrabarty said the process for issuing new banking licences will be expedited, reports PTI.

 

"The process will be expedited... I don't think, it should take much time," Chakrabarty told reporters on the sidelines of an event organised by IDBI Bank.

 

He, however, didn't give a timeframe.

 

Referring to issuing of licences to corporates, the deputy governor said first the guidelines on banking licences should be in place.

 

Yesterday, Lok Sabha passed the Banking Laws (Amendment) Bill, 2011.

 

Among other things, the bill seeks to raise the voting rights of retail/minority investors in private sector banks to 26% from 10%.

 

The Bill also allows RBI to supersede boards of private sector banks and increase the cap on voting rights of private investors in public sector banks to 10% from the present 1%.

 

Changes brought by the new Bill will enable RBI to issue new banking licences.

 

Replying to a question whether the RBI is comfortable with the fact that Competition Commission of India (CCI) will regulate mergers and acquisitions in banking space, Chakrabarty said, "This law is approved by the Parliament and in a parliamentary democracy, what Parliament says is supreme.

 

So, I can't say as an institution that I am uncomfortable."

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