Department of Economic Affairs (DEA), Ministry of Finance, has amended Rule 8 of the Securities Contracts (Regulation) Rules, 1957, via Gazette Notification G.S.R. 318(E), issued on May 19, 2025. The amendment follows a public consultation process initiated in September 2024, in response to concerns raised by stakeholders over specific provisions affecting brokers. Given the evolving scale and nature of broker operations in a more interconnected financial ecosystem, the DEA sought to assess the adequacy of existing regulatory safeguards while maintaining functional flexibility for intermediaries.
The key change clarifies that investments made by brokers will not be regarded as part of their business unless such investments involve client funds or securities, or create financial liabilities for the broker. This clarification applies to both sub-rule (1)(f) and sub-rule (3)(f) of Rule 8. The amendment aims to prevent misinterpretation of brokers’ own investments as business activities, thus reducing unnecessary regulatory burden while still ensuring investor protection where client interests are involved.
This change aligns with the government’s ongoing efforts to improve the ease of doing business in the financial sector and to provide regulatory clarity for market participants. It is expected to facilitate operational clarity for brokers, without undermining the regulatory intent of the original rules. The amendment is effective from the date of its publication in the Official Gazette and will apply moving forward.
Ministry of Finance
Department of Economic Affairs amends Rule 8 of the Securities Contracts (Regulation) Rules, 1957
Amendment gives regulatory clarity to enhance ease of doing business for brokers
Posted On: 19 MAY 2025 5:50PM by PIB Delhi
The Department of Economic Affairs (DEA), Ministry of Finance, amended Rule 8 of the Securities Contracts (Regulation) Rules (SCRR), 1957, via Gazette Notification G.S.R. 318(E). The amendment gives regulatory clarity to enhance ease of doing business for brokers.
After taking note of the concerns raised by various stakeholders over certain provisions in the said Rules, the DEA had released a Consultation Paper in September, 2024, (Consultation Paper for Public Comments on Rule 8 SCRR (1957).pdf) inviting stakeholder comments.
Given the growth in the scale and interconnectedness of the financial sector and the evolution of nature of business of brokers with time, the DEA felt it necessary to review the appropriateness of safeguards embedded in the Rules so that the intent of the Rules is served without constraining activities of the stakeholders.
The amendment has been carried out after due consideration of feedback from the stakeholder and is part of the broader emphasis of the Government to provide regulatory clarity and enhance ease of doing business in the financial sector. It will ensure that market intermediaries continue to support the development of India’s capital markets in a transparent and well-regulated manner.
MINISTRY OF FINANCE
(Department of Economic Affairs)
NOTIFICATION
New Delhi, the 19th May, 2025
G.S.R. 318(E).—In exercise of the powers conferred by section 30 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Central Government hereby makes the following rules further to amend the Securities Contracts (Regulation) Rules, 1957, namely:—
1. (1) These rules may be called the Securities Contracts (Regulation) Amendment Rules, 2025.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. In the Securities Contracts (Regulation) Rules, 1957, in rule 8, —
(i) in sub-rule (1), in clause (f), after the first proviso, the following proviso shall be inserted, namely: —
“Provided further that investments made by a member shall, at all times, not be construed as business except when such investments involve client funds or client securities, or relate to arrangements which are in the nature of creating a financial liability on the broker.”;
(ii) in sub-rule (3), after clause (f), after the first proviso, the following proviso shall be inserted, namely: —
“Provided further that investments made by a member shall, at all times, not be construed as business except when such investments involve client funds or client securities, or relate to arrangements which are in the nature of creating a financial liability on the broker.”.
[F. No. 13/5/SM/2023]
REETU JAIN, Ecomomic Advisor
Note: The principal rules were published in the Gazette of India, Part II, Section 3 vide number S.R.O. 576, dated the 21st February, 1957 and was last amended vide notification number G.S.R. 664 (E), dated the 27th June, 2017.
