Sebi Enables Stock Brokers to Trade in Government Securities via NDS-OM

Markets regulator Sebi has allowed registered stock brokers to use a separate business unit to access the negotiated dealing system-order matching platform for trading in government securities. This follows a move by the RBI to expand access to non-bank brokers, requiring measures for independent operations and compliance.

The Securities and Exchange Board of India (Sebi) has now greenlighted registered stock brokers to engage in trading government securities using the negotiated dealing system-order matching platform. This new provision mandates setting up a separate business unit for this purpose, initiated by a February notification from the Reserve Bank of India.

Sebi's circular emphasized that this business unit must remain distinct from stock brokers' regular operations. Key regulations addressing policy, eligibility, and risk management will be shaped by the respective regulatory frameworks, ensuring proper governance within the financial market landscape.

The stock brokers involved must adhere to requirements such as maintaining distinct accounts and segregated net worth for the new unit, guaranteeing operational independence. Furthermore, typical investor protection mechanisms may not apply to the new unit, as jurisdiction falls under novel regulatory oversight.

(With inputs from agencies.)