October 12, 2025

The Securities and Exchange Board of India (Sebi) has shaken things up for stock brokers with its brand-new penalty system! Imagine this: before, brokers could be slapped with up to 235 penalties for various slip-ups. Now, this number drops dramatically to just 90! How? Sebi has decided that for the same violation, brokers will pay penalty only once across all exchanges instead of multiple fines. That's a big relief for those juggling memberships at many exchanges. Why this sudden change? Sebi pointed out that the word "penalty" carries a heavy stigma. "The term penalty is generally associated with stigma. Using the term penalty for procedural lapses and technical errors creates unintended reputational risk for entities," Sebi said on Friday. To tackle this, many minor lapses will now attract financial disincentives instead of full penalties, reducing the harshness. This fresh framework also brings consistency. Previously, penalties for the same mistake would vary wildly across exchanges, causing confusion and unfairness. Under the new system, a "lead exchange" will charge the penalty if the violation appears on multiple exchanges, stopping the penalties from piling up. There’s more good news: some first-time minor violations might only get a warning. Plus, for certain offenses, penalties will now be capped, keeping the amounts fair and reasonable. To sum it up: - Penalties slashed from 235 to 90 - 40 violations removed from penalty list altogether - 105 minor procedural mistakes now get financial disincentives instead of penalties - Penalty charges unified across exchanges - Reduced and capped penalty amounts - Framework applies to ongoing enforcement cases, easing stock brokers’ worries Sebi’s move promises to cut down the red tape and reduce the reputation risks for brokers. It’s a big step toward a fairer, clearer regulatory environment. This latest change shows how Sebi listens and acts to support the fast-moving stock market world. For all the latest updates on market moves like Sensex, Nifty, and top stocks like SBI, Axis Bank, and Infosys, stay tuned with ETMarkets.com.

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Tags: Sebi, Stock brokers, Penalty rules, Financial disincentives, Stock exchanges, Regulation,