Description

Amendment to SEBI Intermediaries Regulations introducing new compliance criteria for intermediaries regarding net worth, income from permitted activities, and business unit segregation requirements.

Summary

SEBI has notified the Securities and Exchange Board of India (Intermediaries) (Third Amendment) Regulations, 2025, amending Regulation 30A of the SEBI (Intermediaries) Regulations, 2008. The amendment introduces three new mandatory criteria that intermediaries must comply with, effective three days from the date of gazette publication (December 3, 2025). These regulations strengthen regulatory oversight over intermediaries by imposing stricter financial and operational requirements.

Key Points

  • New sub-regulation (1)(ga) added to Regulation 30A of SEBI (Intermediaries) Regulations, 2008
  • Applies to persons who fail to meet minimum net worth or minimum liquid net worth criteria
  • Intermediaries must generate minimum income from permitted activities as prescribed by SEBI
  • Exemptions from income requirements may be granted by SEBI from time to time
  • Intermediaries must segregate their permitted activities into separate business units as specified by SEBI
  • Regulations come into force three days after gazette publication
  • Published in the Gazette of India on December 3, 2025

Regulatory Changes

The amendment inserts a new clause (ga) after the existing clause (g) in sub-regulation (1) of Regulation 30A. This new provision applies to persons who:

  1. Fail to maintain minimum net worth requirements: Intermediaries unable to meet the prescribed minimum net worth or minimum liquid net worth standards will be subject to these regulations.

  2. Fail to generate prescribed income: Intermediaries must earn at least the minimum income from permitted activities as determined by SEBI. However, if SEBI grants exemptions from time to time, failure to meet this criterion will not be considered non-compliance.

  3. Fail to segregate business activities: Intermediaries must transfer their permitted activities to separate business units as specified by SEBI. Non-compliance with business segregation requirements triggers the application of these regulations.

Compliance Requirements

All SEBI-registered intermediaries must:

  • Ensure compliance with minimum net worth and liquid net worth criteria as prescribed
  • Generate minimum income from permitted activities in accordance with SEBI standards
  • Monitor any exemptions granted by SEBI regarding income requirements
  • Establish separate business units for permitted activities as per SEBI specifications
  • Transfer relevant business operations to designated business units within required timelines
  • Maintain records demonstrating compliance with all three criteria

Important Dates

  • Notification Date: December 3, 2025 (published in Gazette of India)
  • Effective Date: December 6, 2025 (three days after gazette publication)
  • Applicability: Immediate compliance required for all intermediaries registered with SEBI

Impact Assessment

This amendment significantly impacts SEBI-registered intermediaries including stock brokers, sub-brokers, investment advisers, research analysts, portfolio managers, and other market intermediaries. The regulations create stringent compliance benchmarks that may require:

  • Capital restructuring: Intermediaries below minimum net worth thresholds must infuse capital or restructure operations
  • Business model adjustments: Firms generating insufficient income from permitted activities may need to scale operations or seek exemptions
  • Operational reorganization: Mandatory business unit segregation requires structural changes, potentially involving separate accounting, compliance, and operational systems
  • Regulatory scrutiny: Non-compliance may trigger enforcement actions, penalties, or suspension/cancellation of registration
  • Market consolidation: Smaller intermediaries unable to meet these criteria may exit the market or merge with larger entities

The amendment demonstrates SEBI’s focus on ensuring financial stability and operational integrity of market intermediaries, ultimately aimed at investor protection and market stability.

Impact Justification

Introduces mandatory compliance criteria for all SEBI-registered intermediaries affecting their operational and financial requirements, with potential consequences for non-compliance