The Securities and Exchange Board of India (SEBI) streamlines Stock Broker and Depository Participant inspections by mandating joint inspection by stock Exchanges and Depositories. Based on deliberations with Market Infrastructure Institutions (MIIs) and the Supervisory Body for IAs/RAs regarding the planning and conduct of joint inspections of market intermediaries by SEBI, an enhanced approach has been adopted for the inspection of intermediaries by SEBI commencing from the Financial Year 2026-27.
The regulatory oversight of market intermediaries has been strengthened by employing a dynamic approach to encompass new risk parameters for identifying and shortlisting of entities for inspections. For robust supervision, following steps are intended to collectively enhance Ease of Doing Business of the intermediaries, as a result of the rationalisation in the frequency of inspection visits.
- Considering the regular inspections of stock brokers, DPs, IAs and RAs done by Stock Exchanges and Depositories, the targeted number of inspections to be carried out by SEBI in the Financial Year 2026-27 has been rationalised to approximately one-third of the inspections conducted in the preceding Financial Year.
- Repetitive annual comprehensive inspections of compliant entities by SEBI, especially QSBs are being discontinued. However, entities that repeatedly feature across shortlisting parameters over time, carry high ‘risk scores’, or trigger multiple alerts processed by Exchanges are being prioritised.
- Inspection of entities with multiple intermediary registrations are being conducted jointly by different departments of SEBI (wherever feasible), with an objective to reduce the number of inspection visits across the Financial Year.
- Greater emphasis has been laid upon alerts generated by the Exchanges, complaints and social media to assign a higher weightage to recent instances of possible violations. Accordingly, shortlisting is being done on a quarterly basis.
- Further, inspections are being undertaken based on market intelligence/references including inputs received from ROs/LOs, covering themes including but not limited to technical glitches, cyber incidents and Authorised Persons of stock brokers based on references received.
Radhika Goyal is Author of Taxconcept Gurugram head office, for deeply reported tax, gst and income tax articles on issues that matter. He splits her time between New Delhi and Bengaluru, and has worked as a reporter, a podcaster and an editor for publications across India.