The National Stock Exchange of India has unveiled a comprehensive plan to tighten regulations for authorised persons, including enhanced eligibility criteria, technology safeguards, and broker accountability measures, amid broader market tightening efforts.
The National Stock Exchange of India has proposed a tougher regulatory framework for authorised persons, a move that would raise entry barriers, increase broker oversight and tighten investor safeguards across one of the country’s most widely used distribution channels. In a consultation paper released for public comment, the exchange said the changes were being developed with the Securities and Exchange Board of India and were intended to strengthen supervision of authorised persons, who often act as the front line between brokers and retail clients.
Under the draft rules, would-be authorised persons would need to meet stricter eligibility standards, including educational qualifications, work experience, mandatory NISM certification and higher financial thresholds. Individual authorised persons would need a minimum net worth of ₹5 lakh, while partnership firms, LLPs and body corporates would need ₹25 lakh. Each authorised person would also have to keep a ₹1 lakh deposit with the broker. The exchange also wants fuller disclosure at onboarding, including bank and demat accounts as well as business websites and social media handles, and says brokers should screen those channels for red flags.
The proposal goes further on technology and surveillance. For authorised persons who use trading terminals, the exchange wants geo-tagging, CCTV monitoring and face recognition or biometric authentication before access is granted. Brokers would also have to take direct responsibility for the actions of their authorised persons and employees, carry out regular inspections and surprise audits, and use offsite alerts to spot unusual trading, repeated complaints and possible compliance breaches. The framework also repeats that authorised persons should not hold client funds or securities in their own accounts.
The consultation arrives amid a wider tightening of market rules in India. Exchanges have already moved to standardise penalties for compliance lapses and strengthen rules around algorithmic trading, while the market regulator has also pushed brokers to step up checks on the more than 100,000 authorised persons operating in the system. In a separate move, the NSE has required people who refer new clients to be pre-approved as authorised persons, a change that could affect online brokers’ acquisition models. The exchange is taking comments on the latest proposals until August 27 before deciding whether to finalise the framework.
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