The Securities and Exchange Board of India (SEBI), on April 24, 2026, issued a consultation paper proposing a revised methodology for calculating variable net worth of stock brokers to better align capital requirements with operational risks.
The proposal arises due to the upstreaming framework, which has reduced client fund retention with brokers, making the existing formula (10% of client cash balance) ineffective. SEBI has suggested a new approach based on average client credit balances and the number of active clients (both direct and through authorised persons) to ensure adequate financial cushion.
Stakeholder comments have been invited till May 15, 2026, on the draft circular, which aims to strengthen the risk management framework and enhance investor protection by linking net worth requirements to the scale and risk profile of broker operations.
