SEBI seeks public feedback on PCM definition, clarifying PCMs can’t trade on their exchange but may hold trading rights as investors, per advisory committee
Mumbai
The Securities and Exchange Board of India (SEBI) has proposed changes to stock broker regulations, including a formal definition of “algorithmic trading” and clarifications on broker rules.
While SEBI has issued circulars on algorithmic trading earlier, the term was never officially defined. It now suggests defining it as “any order generated/placed using automated execution logic.” The proposal comes from a working group comprising stock exchange officials, brokers, legal experts, academicians, and investor representatives. The aim is to simplify rules, remove outdated provisions, and align with current market practices.
These recommendations, reviewed by SEBI’s Intermediary Advisory Committee, are now open for public feedback. SEBI also wants to refine the definition of “Professional Clearing Member” (PCM). Presently, PCMs cannot have “trading rights” in the exchange where they are registered, but confusion exists over the term’s scope. The regulator clarified that while PCMs cannot trade in that exchange, they may still hold trading rights as investors.
Another change involves stock brokers operating through subsidiaries registered on other exchanges. SEBI proposes that turnover from such subsidiaries be excluded only if the broker has paid turnover-based fees for five years, plus fees for an additional five-year block, to the concerned exchange.
The suggested PCM definition also specifies requirements for clearing members in commodity derivatives exchanges to join a recognised clearing corporation from a date set by SEBI.
Public comments on the proposed amendments can be submitted until September 3. The final regulations are expected to streamline operations and offer more clarity for brokers and market participants.
