The Securities and Exchange Board of India, in exercise of the powers conferred by Section 30 of the Securities Contracts (Regulation) Act, 1956, vide Notification No. G.S.R.318(E),[1] dated May 19, 2025, issued the Securities Contracts (Regulation) Rules, 2025 (“Amended Rules”). The Amended Rules have been promulgated under the Securities Contracts (Regulation) Amendment Rules, 2025 and introduce clarifications on the interpretation of investments made by members of stock exchanges. The Amended Rules shall come into force immediately.
Key highlights of the Amended Rules are as follows:
1. Amendments to Rule 8(1)(f) of the Securities Contracts (Regulation) Rules, 1957: After the first proviso, a second proviso has been added, specifying that investments made by a member shall not be construed as business except in the following situations:
(i) When such investments involve client funds or client securities.
(ii) When the investments relate to arrangements that create a financial liability on the broker.
2. Amendments to Rule 8(3)(f) of the Securities Contracts (Regulation) Rules, 1957: Similarly, after the first proviso, a second proviso is inserted in sub-rule (3). This proviso mirrors the one added to sub-rule (1), clarifies that investments made by a member are not considered as business, unless:
(i) The investments involve client funds or securities.
(ii) Or the investments relate to arrangements that create a financial liability on the broker.
[1]https://www.sebi.gov.in/legal/rules/may-2025/securities-contracts-regulation-amendment-rules-2025_94057.html