SEBI takes a big chunk of income away from stock brokers

Capitalmind Podcast

Stockbroking is a unique business enabling millions of people to trade billions of dollars of stocks with unknown counterparties. All trades, in this highly regulated ecosystem, are executed seamlessly, settled correctly, and recorded meticulously.

It’s fascinating to see how far India has come in making this ecosystem world-class and in some cases, the best in the world.

In this podcast, Deepak and Shray discuss the nuances of stock broking and how proposed regulations will impact the stock broking industry. They discuss, in detail, the role of stock brokers, regulators (SEBI), clearing corporations, exchanges, and investors.

As an investor, how brokers are regulated doesn’t impact you directly. Yet, it is important to figure out what happens to your money when you click that buy/sell button on your app.

Listen in as we talk about:

• How does stock broking work in its present form?
• What are the new regulations proposed?
• How will these regulations impact the stock brokers?
• How will it benefit the investors?

Timestamps:

02:10 - How trades are settled by your broker and exchange? Earlier and Now?

14:15 - Moving from t+2 to t+1 in settling share transactions

16:20 - Now clearing corporation holds the transactions before settlement. Is it safe?

21:15 - The practice of commingling (shares & money) and regulations around it

40:00 - Drying up float income and the new role of a broker?

44:00 - How much does “no float income” hurt the broker?

52:30 - Will these regulations, meant to protect investors, actually lead to an increase in brokerage charges?

55:10 - Can these regulations prove to be counterproductive?

1:03:00 - Closing remarks