Description

NSE clarifies that stock brokers must continue complying with existing variable networth requirement of 10% of average daily client cash balance until SEBI specifies revised requirements under new regulations.

Summary

NSE has issued a clarification regarding the computation of variable networth requirements for stock brokers. Members must continue to comply with the existing variable networth calculation method specified under SEBI (Stock Brokers) Regulations, 1992 until SEBI specifies revised requirements under the new SEBI (Stock Brokers) Regulations, 2026. The variable networth requirement remains at 10% of the average daily cash balance of clients retained with the broker across segments and exchanges in the previous 6 months.

Key Points

  • Variable networth requirement continues as 10% of average daily client cash balance across segments/exchanges
  • Calculation based on previous 6 months of client cash balances retained with the member
  • Existing framework under SEBI (Stock Brokers) Regulations, 1992 remains applicable
  • New SEBI (Stock Brokers) Regulations, 2026 will specify revised variable networth requirements in future
  • All members must continue current compliance until SEBI issues new specifications

Regulatory Changes

While SEBI (Stock Brokers) Regulations, 2026 have been introduced, the specific variable networth requirements under the new regulations are yet to be specified by SEBI. This circular provides transitional guidance to ensure continuity of existing capital adequacy norms. The circular references previous NSE circulars NSE/COMP/51578 dated March 09, 2022 and NSE/COMP/55447 dated February 01, 2023, along with SEBI gazette notification SEBI/LAD-NRO/GN/2022/73 dated February 23, 2022.

Compliance Requirements

  • Stock brokers must maintain variable networth equal to 10% of average daily client cash balance
  • Calculation must include client funds retained across all segments and exchanges
  • Average to be computed over the previous 6 months period
  • Members must continue this compliance framework until revised requirements are notified by SEBI
  • For support or queries, members should contact NSE helpdesk at 1800 266 0050 (IVR option 3) or email memcompliance_support@nse.co.in

Important Dates

  • Circular Issue Date: February 06, 2026
  • Effective Date: Immediate (continuation of existing requirements)
  • Applicable Until: SEBI specifies revised variable networth requirements under new regulations

Impact Assessment

This circular provides regulatory certainty during the transition to new SEBI broker regulations. Stock brokers can continue their existing capital planning and networth management processes without disruption. The impact is neutral as it maintains status quo rather than introducing new requirements. Members should monitor for future SEBI notifications that will specify revised variable networth requirements under the 2026 regulations framework. The clarification ensures consistent application of capital adequacy norms across the industry during the regulatory transition period.

Impact Justification

Provides regulatory clarity on continuation of existing variable networth requirements for stock brokers during transition to new SEBI regulations, ensuring no disruption to capital adequacy norms