Govt amends Rule 8 of the Securities Contracts (Regulation) Rules, 1957 [Download Gazette PDF]

The Indian government has made changes to an old rule to make life easier for stock market brokers. The Department of Economic Affairs (DEA) under the Ministry of Finance has updated Rule 8 of the Securities Contracts (Regulation) Rules (SCRR), 1957. This update was officially announced through a government notification called G.S.R. 318(E).

The Department of Economic Affairs (DEA), ministry of finance has amended Rule 8 of the Securities Contracts (Regulation) Rules, 1957 to clarify that any investments made by a member (broker) shall not be treated as business activity, unless such investments involve client funds or securities or result in a financial liability for the broker, according to a notification on Monday.

Rule 8 of the Securities Contracts (Regulation) Rules, 1957 (SCRR) restricts brokers from engaging, as a principal or employee, in any business other than securities or commodity derivatives. However, according to the rule, they may act as brokers or agents in other businesses, provided such roles do not entail personal financial liability.

Over time, the stock market and the way brokers work have changed a lot. Many brokers and experts had said that some of the rules were outdated and made it harder to do business. To understand the problems better, the government released a Consultation Paper in September 2024 and asked the public and market participants to share their views.

After collecting and studying the feedback, the government decided it was time to make the rules clearer and more business-friendly.

What Does This Mean for Brokers?

This amendment brings:

• Clearer rules that are easier to understand and follow
• Less confusion about what is allowed and what is not
• Fewer obstacles for brokers to carry out their work
• A better environment to do business smoothly and legally

The goal is to support the growth of India’s financial markets while still making sure everything is done in a fair and transparent way.

A Step Toward Ease of Doing Business

This rule change is part of a bigger plan by the government to make it easier for businesses to grow in India, especially in the financial sector. The idea is to help brokers and other financial players work more efficiently without unnecessary red tape, while also protecting investors and maintaining trust in the market.

In simple words, the government wants to support honest businesses and keep the financial system strong and well-regulated at the same time.

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