Online stock trading: Sebi cuts approval timeline to 7 days for brokers

Securities and Exchange Board of India (Sebi) on Thursday reduced the duration taken by exchanges for granting approval to stock brokers for internet-based trading to seven days from 30 days previously. The move is aimed at improving ease of doing business, the market regulator stated.

Brokers have to apply to a stock exchange for a formal permission to provide internet-based trading service. "The stock exchange, which was required to communicate its decision to the member within 30 calendar days, will now have to do so within 7 days, Sebi said in its circular.

The online/internet trading can take place through order routing systems, which will route client orders to exchange trading systems for execution. Thus, a client sitting in any part of the country can trade using the internet as a medium through brokers' internet trading systems.

In addition, the market watchdog has abolished the existing requirement of periodic confirmation of internet-based trading (IBT) statistics by stock brokers before they are published by stock exchanges.

Instead, exchanges would publish statistics on the basis of details of IBT terminals provided by stock brokers. Exchanges, in this regard, can obtain information or declaration about the said terminals from stock brokers as deemed fit by them.

The decision has been taken after Sebi received requests pertaining to internet-based trading from the Industry Standard Forum (ISF) of stock brokers.

Sebi mentioned that the fresh guidelines will be applicable with immediate effect.