Description

NSE clarifies that stock brokers can refer banking products offered by banks/NBFCs through referral arrangements, subject to compliance with third-party product guidelines.

Summary

NSE has issued a clarification regarding the distribution of third-party products by trading members. Stock brokers are permitted to provide references on their apps/platforms to banking products offered by banks and Non-Banking Financial Companies (NBFCs) when such references are in the nature of referral arrangements, subject to compliance with existing third-party product guidelines. This clarification follows earlier circulars that prohibited stock brokers from engaging as distributors in lending products (Home Loan, Vehicle Loan, Personal Loan, Education Loan, LAS, etc.) except those specifically permitted by SEBI.

Key Points

  • Stock brokers cannot engage as distributors in lending products (Home Loan, Vehicle Loan, Personal Loan, Education Loan, LAS, etc.) unless specifically permitted by SEBI
  • References to banking products offered by banks/NBFCs on broker apps/platforms are permitted
  • Such references must be in the nature of referral arrangements
  • All referral arrangements must comply with third-party product guidelines
  • This circular clarifies previous guidance issued on June 16, 2025 and December 22, 2025

Regulatory Changes

This circular does not introduce new regulations but provides important clarification on existing third-party product distribution rules. It distinguishes between:

  • Prohibited: Direct distribution/engagement in lending products by stock brokers
  • Permitted: Referral arrangements for banking products offered by banks/NBFCs on broker platforms, subject to compliance with third-party product guidelines

Compliance Requirements

  • Trading members must ensure that any reference to banking products on their apps/platforms is structured as a referral arrangement only
  • Brokers must comply with all third-party product guidelines as previously outlined in NSE/INSP/68566 dated June 16, 2025
  • Members must not engage as distributors in lending products unless specifically permitted by SEBI
  • Trading members are advised to take note of this clarification and ensure compliance

Important Dates

  • Circular Date: December 24, 2025
  • Effective Date: Immediate
  • Reference Circulars:
    • NSE/INSP/68566 dated June 16, 2025
    • NSE/INSP/71922 dated December 22, 2025

Impact Assessment

Operational Impact: Medium - This clarification provides stock brokers with clarity on permissible activities regarding banking product references, allowing them to maintain referral relationships with banks/NBFCs while ensuring they do not cross into prohibited distribution activities.

Market Impact: Low to Medium - The clarification enables brokers to continue offering value-added services to clients through referral arrangements without violating regulatory guidelines.

Compliance Impact: Medium - Brokers need to review their existing arrangements with banks/NBFCs to ensure they are structured as referral arrangements and comply with third-party product guidelines, rather than direct distribution agreements for lending products.

Impact Justification

Clarification provides operational flexibility for brokers to refer banking products through referral arrangements while maintaining compliance boundaries on direct distribution of lending products