NSE has notified all trading members of the SEBI (Intermediaries) (Amendment) Regulations, 2026, published in the Official Gazette of India on April 15, 2026 (No. 267). The regulations are in force from the date of publication. The amendments modify the SEBI (Intermediaries) Regulations, 2008 — primarily Schedule II — by revising the fit and proper criteria, introducing mandatory disclosure obligations, and updating disqualification and suspension timelines.

Key Points

• SEBI (Intermediaries) (Amendment) Regulations, 2026 published in the Official Gazette on April 15, 2026 and immediately in force.
• Applicable to all NSE trading members; compliance is mandatory.
• The term “intermediary” (मध्यवर्ती) is standardised to “Intermediary” throughout the principal regulations.
• New definition of “day” inserted in Regulation 2(1): means calendar day, unless specified otherwise.
• Schedule II — fit and proper criteria — substantially amended.
• New clause 3A: Intermediaries must notify SEBI within 15 working days of any disqualifying event occurring to a person referred to in clause 2.
• New clause 3B: SEBI may declare a person “not fit and proper” after providing a reasonable opportunity of hearing.
• Clause 5 amended: reference corrected from 11B(11B) to 11B(1); the suspension/cooling-off period reduced from one year to six months.
• Clause 4 amended: removal of the default five-year outer limit where no period is specified in an order.
• Clause 6 replaced with a new provision relating to associates of applicants/intermediaries.

Regulatory Changes

1. Terminology Standardisation The word “intermediary” (Hindi: मध्यवर्ती) wherever appearing in the 2008 Regulations is replaced with “Intermediary” (English term retained uniformly).

2. New Definition – “Day” [Regulation 2(1), new clause (ea)] “Day” means calendar day, unless a contrary meaning is specified elsewhere in the regulations.

3. Schedule II – Fit and Proper Criteria [Clause 3, Sub-clause (b)]

• The threshold phrase changed from “has not been disqualified in any of the following manners” to “any of the following has occurred in the case of that person” — shifting from a negative declaration to a positive disclosure trigger.
• Items (i) and (ii) of sub-clause (b) deleted.
• Item (v) broadened: earlier restricted to offences involving moral turpitude; now covers (a) any economic offence, (b) any offence under laws relating to securities, or (c) any other offence including acts involving moral impropriety.
• Item (vi): the phrase relating to initiation of proceedings or liquidation removed.

4. New Clause 3A – Mandatory Disclosure Obligation If any disqualifying event under clause 3(b) occurs to a person referred to in clause 2, the applicant or intermediary must notify the Board within 15 working days of recognised stock exchanges.

5. New Clause 3B – Board’s Power to Declare ‘Not Fit and Proper’ The Board may, after giving a reasonable opportunity of hearing, declare a person not fit and proper.

6. Clause 4 Amendment The default provision deeming a disqualification to last five years (where no period is specified in the order) has been removed.

7. Clause 5 Amendment

• Cross-reference corrected: 11B(11B) → 11B(1).
• Period reduced from “one year” to “six months”.

8. Clause 6 – Replaced New clause 6 introduced governing disqualification consequences when an associate of the applicant or intermediary is involved (full text truncated in source; refer to Gazette copy).

Compliance Requirements

• All trading members and intermediaries must review the amended Schedule II fit and proper criteria and ensure ongoing compliance.
• Disclosure obligation: Any disqualifying event must be reported to SEBI within 15 working days of the event occurring.
• Members must update internal compliance frameworks to reflect the broadened definition of disqualifying offences (economic offences and securities law violations now explicitly included).
• Legal and compliance teams should note the removal of the five-year default outer limit in clause 4 and the reduction of the clause 5 cooling-off period to six months.
• For clarifications, contact: memcompliance_support@nse.co.in

Important Dates

Impact Assessment

Regulatory Impact (High): This amendment materially changes the fit and proper framework under which all SEBI-registered intermediaries operate. The broadening of disqualifying offences beyond moral turpitude to include economic offences and securities law violations significantly widens the net for potential disqualification.

Operational Impact (High): The new mandatory 15-working-day disclosure obligation for disqualifying events requires intermediaries to establish or strengthen internal event-monitoring and escalation processes. Failure to disclose in time could itself trigger regulatory action.

Procedural Impact (Medium): The reduction of the clause 5 period from one year to six months may benefit intermediaries subject to temporary suspensions. Removal of the five-year default cap in clause 4 could, however, increase uncertainty in enforcement orders that do not specify a time period.

Market Impact (Low): No direct impact on trading operations, pricing, or market microstructure. Impact is confined to the regulatory standing of intermediaries and their key personnel.