SEC imposes minimum shareholder’s funds for brokers

The Securities and Exchange Commission has decided to mandate all stockbrokers and stock dealers to maintain a minimum requirement of shareholder’s funds of Rs. 100 million or 50% of their stated capital, whichever is higher effective 1 January 2018.

The SEC said the decision was taken after having deliberated over several measures taken as at date to protect the interests of the clients of stockbrokers and stock dealers. The SEC said the new directive would strengthen the financial position of brokers and dealers irrespective of losses sustained in the past as part of risk assessment framework.

The SEC Commissioners at their meeting on 10 January also viewed that mandating a minimum shareholder’s fund requirement would uplift the standards of stockbrokers and dealers and equip them better to play a greater role in the development of the market.