The Securities and Exchange Board of India (SEBI) on Wednesday increased the basic minimum capital (BMC) deposit for stock broker and trading members to up to Rs.50 lakh from the earlier maximum of Rs.10 lakh. It would be implemented by the stock exchanges by March 31, 2013. The BMC deposit requirement was prescribed to be commensurate with the risks, other than market risk, that the broker may bring to the system.
“Over the years the market structure has undergone significant structural changes. In the light of these, it has been decided to realign the BMC requirements with the risk profiles of the stock brokers / trading members in cash / derivative segment of the stock exchange,” SEBI said in a notification to all stock exchanges.
The SEBI fixed the BMC at Rs.10 lakh for only proprietary trading without algorithmic trading (Algo), Rs.15 lakh for trading only on behalf of client (without proprietary trading) and without Algo, Rs.25 lakh for proprietary trading and trading on behalf of client without Algo and Rs.50 lakh for all trading members and brokers with Algo.
This is applicable to all stock brokers and trading members of exchanges having nation-wide trading terminals. For those not having nation-wide trading terminals, it would be 40 per cent of the prescribed BMC deposit requirements.
Further, exchanges were told that no exposure shall be granted against the BMC deposit. The stock exchanges would be permitted to prescribe suitable deposit requirements, over and above the SEBI prescribed norms, based on their perception and evaluation of risks involved. Minimum 50 per cent of the deposit shall be in the form of cash and cash equivalents.
