SEBI Move on DMA Will Hit Stock Brokers
In a move that may hit brokers, stock market regulator Sebi is considering a revamped direct market access (DMA) facility under which investors can trade directly on the exchanges without going through a stock broker.
 
Under the new norms, whoever wants to trade directly need not enter into a separate 'broker-client agreement' and it would be replaced by a simpler 'terms and conditions' document.
 
The broker, however, would have to specifically authorise clients or investment managers acting on behalf of the clients for providing DMA facility, after fulfilling Know Your Client (KYC) requirements and carrying out necessary due diligence.
 
The broker would have to maintain proper records of such due diligence procedures, SEBI said in a circular.
 
Currently, the DMA facility is available only for the institutional clients.
 
Nithin Kamath, founder and CEO, Zerodha said in a tweet, "DMA has always been available for institutions, but through a broker. Can this be offered to retail without broker? Yeah, but retail investors use a broker for the platform (UI, UX, different order types, reporting, etc) on which they trade, DMA is not suitable."
 
"The biggest task for a broker is handling customer queries, complaints, etc. The industry has tens of thousands of employees for this. Can exchanges take over this and also act as a regulator to regulate itself when it comes to customer grievances? Maybe not", Mr Kamath said.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 
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    COMMENTS

    suketu

    1 week ago

    Problem with brokers is their Z grade advise/jorjabardasti to buy "bhangar cap" shares.This step wl be big advantage to stop nonsense broker advise.

    maheep74sharma

    1 week ago

    Then it is going to help only HNI clients only not for ordinary investor like me.

    renukaviru

    1 week ago

    The possibility of a minimum qualifying quantity/amount should be the basis.

    REPLY

    m.prabhu.shankar

    In Reply to renukaviru 7 days ago

    In our country whatever services we provide to our citizens, we should make sure we provide to all and not based on their financial status. These kind of enablers help grow the country easily rather than always providing high quality services only to the rich and a few prefered customers.

    ‘No Decision Taken To Reintroduce FRDI Bill’, says Govt, Doesn't Rule It Out Either
    The ministry of finance has issued a rare clarification to say that the Union government has not taken any decision to reintroduce the Financial Resolution and Deposit Insurance Bill, 2017 (FRDI Bill). This follows panic caused by social media messages about mounting non-performing assets (NPAs) of banks following the coronavirus (COVID) pandemic and the fear that bank deposits would be impounded to recapitalise banks. The Reserve Bank of India (RBI) governor had also alluded to the need for this Bill at a recent conclave. 
     
    However, the government makes no mention of the Financial Sector Development and Regulation (Resolution) Bill, 2019 (FSDR), which was scooped by Moneylife in December 2019. This Bill had modified the earlier FRDI Bill and removed direct reference to the controversial ‘bail-in’ clause while authorising a Resolution Authority to modify all contracts – presumably those with depositors as well. Moneylife had also seen a copy of the briefing note from the finance ministry to the Union Cabinet. 
     
    Interestingly, the government clarification does not say that plans for such a legislation have been shelved, but only that there was ‘no decision’ on the issue.  It is however clear that the current panic among depositors is rather premature, but their fears also indicate that any hasty action to bring a draconian bill without taking people into confidence will backfire badly. 
     
    The FRDI Bill was introduced in Lok Sabha on 10 August 2017 and, then it was referred to the Joint Committee of Parliament (JPC) for examination and report thereon.
     
    "The government had withdrawn the FRDI Bill in August 2018 for further comprehensive examination and reconsideration of the subject," the ministry had said.
     
    The FRDI Bill had triggered panic among depositors over the controversial ‘bail-in provision’ which held out the threat of forcibly converting term deposits with banks (above a certain insured threshold) into equity to recapitalise failed banks. Perhaps the small investor did not believe government’s assurance, but the bail-in clause of FRDI punctured the trust of large numbers of small creditors, who feared benefit to the non-performing asset (NPA)-causing corporate borrowers responsible for around 80% of NPAs, at their financial cost.
     
    However, as reported by Moneylife, the government has been trying to introduce revised Financial Sector Development and Regulation (Resolution) Bill, 2019 (FSDR), instead of FRDI.
     
    Unlike FRDI, the FSDR draft is not available to the public, so one would wonder why FRDI was to be replaced by FSDR, which is aimed at the rescue of banks – among other financial institutions – from collapse.  
     
    A briefing note prepared by economic affairs secretary, Atanu Chakraborty had made some astonishing assertions about the financial sector (Read: Moneylife Exclusive - FRDI Bill To Come Back as FSDR: Many Questions Unanswered)
     
    The new Bill had covered a wide spectrum of financial entities including banks, insurance companies, financial market infrastructure, payment systems and other financial service-providers (excluding individuals and partnership firms) which are now scattered under different legislations. For the first time, it also covers cooperative banks and regional rural banks. 
     
    It provided clearly defined triggers for prompt corrective action (PCA) framework to bring a problem institution into resolution. It also claims to cover a ‘systemic vacuum’ with regard to bankruptcy situations and will include the resolution of large non-banking finance institutions. 
     
    You may also want to read...
     
     
     
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    COMMENTS

    umeshs62

    1 week ago

    Without making any adverse comment on government, a strong & credible opposition party is important for democracy to thrive.

    bala.mathur

    1 week ago

    If we had a responsible and sensible opposition in this country, drastic measures as FRDI Bill which are political suicides, would have never been even contemplated by any ruling party.

    REPLY

    surajitghosh628

    In Reply to bala.mathur 1 week ago

    Correct. The opposition party of the country is busy only China and ladhakh

    alok.asthana

    In Reply to surajitghosh628 1 week ago

    Let us be thankful that at least someone is.

    SEBI extends relaxations of norms till 31st December for buy back, open offers
    The Securities and Exchange Board of India (SEBI) on Monday extended the relaxations on its regulations for buy back and open offers up to December 31.
     
    The securities market regulator in May granted one-time relaxations from strict enforcement of certain regulations of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and the SEBI (Buy back of Securities) Regulations, 2018 pertaining to open offers and buy-back through tender offers opening upto July 31.
     
    "Based on the representations received from the market participants, the validity of relaxations is further extended and shall be applicable for open offers and buy back through tender offers opening upto December 31, 2020," said the SEBI circular.
     
    In another development, the regulator has introduced a one-time settlement scheme for entities that executed trade reversals in the stock options segment of BSE from April 1, 2014, to September 30, 2015.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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